This report is from Hefei Property Market Insider: Today is March 22, 2021, the most special day for Anhui Yuanchen Environmental Protection Technology Co. Stock code 688659.
Anhui Yuanchen Environmental Protection Technology Co., Ltd. was founded in 1998, with a registered capital of 80 million yuan and 252 employees. In the past twenty years, through continuous development and innovation, it has become a company in the industrial and indoor air pollution treatment industry. The main products in the field of industrial air treatment are dust filtering materials and denitrification catalysts, etc. We have a hazardous business license for waste catalysts issued by Anhui Environmental Protection Department, and have become a domestic home across denitrification catalyst production and regeneration. We are applying for the first-class general contracting qualification of the national Ministry of Housing and Construction, and actively carrying out third-party governance engineering (including BOT and PPP) services.
Photo from the RFP
1, from the recent four-year view, the overall revenue continued to grow, 2019 performance relative to the 2018 margin has a large growth, 2020 by the epidemic, as well as entry into the epidemic protective supplies, performance growth brought about a significant decline in impact.
2, from the balance sheet, the balance sheet as a whole does not fluctuate much, in the last three years from 46% of debt to 42% there is a small decline.
3, from the research and development, the company has been expanding the scale of investment in research and development in the last four years, reaching 13,481,400 yuan, 16,390,800 yuan, 19,058,200 yuan and 10,825,100 yuan respectively, accounting for 5.05%, 5.06%, 5.25% and 6.04% of the operating income in the same period. The company has always attached great importance to its independent research and development capability since its establishment.
The company has also developed more situations along the way
Two penalties in the reporting period and undisclosed cases involving fake invoices
The prospectus disclosed that Yuanchen Technology had been subject to two administrative penalties in the reporting period.
On January 17, 2020, Hefei Customs issued the Certificate of Enterprise Creditworthiness No. [2020] 020, in which Yuanchen Technology had one record of administrative penalties imposed by Customs for violation of customs supervision regulations from January 1, 2016 to January 16, 2020.
On January 6, 2020, the Public Security Fire Brigade of Hefei Xinzhan District issued the Certificate, from January 1, 2016 to January 6, 2020, Yuanchen Technology found one penalty instrument in the fire supervision and inspection system for the Decision on Administrative Penalty (Hefei Xin Gong (Fire) Line Penalty Decision [2019] No. 0014).
In addition to this, Yuanchen Technology was involved in a case of fake invoices.
According to the Criminal Judgment of the First Instance of Changfeng County People's Court of Anhui Province (2016) No. 351 of Anhui 0121 Criminal Initial Judgment, Changfeng Beicheng Automobile Transportation Co., Ltd. issued a total of 101 special VAT invoices for goods transportation industry to eight units including Anhui Yuanchen Environmental Protection Technology Co. without providing actual labor services, with a total price tax amount of 4941214.24 yuan.
Yuanchen Environmental Protection Technology used the fictitious invoices for accounting purposes, which is an obvious act of financial falsification.
Challenges
1, the biggest risk from, carbon neutral, the risk of future coal thermal power demand reduction, although the short-term 3.5 years within the risk is relatively small, long-term coal power generation is replaced by clean energy is the general trend, according to the Environmental Protection Industry Association Baghouse Dust Committee, 2020 to 2022, the power market baghouse dust compound annual growth of only 4%. So the subsequent market is basically stable, with less room for increase.
2, from the stock market track, environmental track is a lukewarm track, the market leader Bi Water and China Tianying is a representative of the environmental track is not sought after by the market for the simple reason that the performance is unstable, the previous year Bi Water 1.68 billion profit in 2019, only 160 million in the three quarters of 2020, China Tianyuan from 2019, 710 million profit decline to 490 million in 2020, fluctuations The range is too large. However, the recent national policy support, hold shares collapse, short-term environmental protection stocks small and medium-sized market capitalization is sought after.
3, affected by the global liquidity of the last year or so, global inflation rose, all kinds of high-temperature corrosion-resistant filter bags and denitrification catalysts and other series of prices are also rising, for Yuanchen environmental protection, the company's material costs account for about 80% of the main business costs, the company is also facing a relatively large risk of price increases in the short term.
4, protective equipment-related assets have been provided for impairment, the risk of continued impairment in the future . With the gradual stabilization of the domestic epidemic, the company's new protective gear business in the industry outlook has changed significantly, the current domestic production capacity of such protective gear, the market demand for small and other phenomena, resulting in the company's masks, meltblown cloth production line shutdown idle, the company's protective gear assets are subject to impairment. As of the end of June 2020, the total net book value of the Company's inventory, prepayments corresponding to inventory and fixed assets related to protective products was RMB87,416,200, and the impairment loss was RMB45,997,000. After the impairment, the carrying value of the company's protective gear-related assets was RMB 41,419,200.
Objectively speaking, Yuanchen's emergency production of medical supplies during the epidemic was a very responsible issue, providing emergency materials for the community, which needs to be praised, but commercially speaking, it was a failed investment because the epidemic protective supplies are low-end products, and once the global machines were turned on production mode, there was soon excess capacity. It is a kind of devouring of the company's net assets.
Future Opportunities
Compared with the long-term company some adverse effects, short-term company development opportunities are still a lot, such as technology improvement, expansion of customer groups, foreign market development. The core opportunity for future development is, of course, the change of waste treatment method from landfill to incineration, which is the main method of waste treatment in the United States, Japan and Europe. After all, coal and fossil energy will be used less and less in the long term.
