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IPO Ningwu new material: to improve quality instead of expanding blindly
Updated: 2018-01-12 13:24 Source: PUWORLD share:

PUWORLD--Recently, here comes another good news in polyether industry. Jurong Ningwu New Materials Co., Ltd. disclosed in the CSRC prospectus, intending to launch 43million in Shanghai Stock Exchange, and planning to raise RMB323 million for the project of polyether technology producing 300,000 tons and R & D center construction. Polyether industry emerged a new company recognized by capital market. Whether can Ningwu new material do like Polaroid to make use of the power of capital markets, continuing the leading role in the industry?

History of Ningwu new material

Jurong Ningwu Chemical Co., Ltd. was established in 2001, located in the town of Jurong City. The original production project of polyether I was 119,000 tons /year, polyether II was 1,000 tons / year, polyether III was 30,000 tons / year, oilfield chemicals (demulsifier) was 10,000 tons / year, epoxy asphalt was 20,000 tons /year.

In 2008, Jurong Ningwu New Material Development Co., Ltd., Jurong Ningwu Hi-tech Development Co., Ltd. and Jurong Ningwu Science and Technology Development Co., Ltd. were established on the basis of the original Jurong Ningwu Chemical Co., Ltd., and cancelled the original Jurong Ningwu Chemical Co., Ltd. The original project of 150,000 tons / year polyether production goes to Jurong Ningwu New Materials Development Co., Ltd.

In 2015, Jurong Ningwu New Material Development Co., Ltd. established the project of "150,000 tons / year polyether (90,000 tons / year PPG polyether, 60,000 tons / year POP polyether)".

Ningwu new material------ Top in polyether industry.

Chart 1: Production Forecast of Flexible Polyether Capacity in China in 2017 (Unit: 10,000 tons)

With the development of polyurethane industry in China, polyether polyols production also increased rapidly. According to Orisage, by the end of 2017, China's polyether polyol production will have reached 5.9 million tons, increasing by 3%-4% compared to 2016, and the growth rate has slowed down.

Chart 2: 2017E China Capacity Share of Polyether Polyols Suppliers (Unit: Percentage)

From the distribution of productivity, Jilin Dexinlianbang and other polyether enterprises are top Chinese polyether enterprises. In China, polyether market has a larger market share, and the product is popular in the market.

Chart 3: Proportion of different Polyether Products of Ningwu New Materials from January to June in 2017

From the polyether production of Ningwu new material, the company's polyether products are various, mainly based on Flexible Polyether. In the first half of 2017, the production of Flexible Polyether accounted for about 48% of the total output.

Chart 4: Top five customers of Ningwu New Materials proportion from January to June in 2017

The latest data shows that the famous international chemical giant BASF, Covestro, Huntsman are customers Ningwu new material. As Ningwu new material polyether quality, widely acclaimed by foreign customers, many foreign chemical giants are purchasing polyether polyols Ningwu new material to produce polyether compound. Ningwu new material polyether product was top enterprises.

Listed enterprises focus on product quality improving

Chart 5: application of raising funds of Ningwu new material to

From the flows of funds, listing funds of Ningwu are mainly used for polyether technology projects and R & D center construction projects whose annual output is 300,000 tons. The total financing amount was about 323 million.

However, from project itself, financing is mainly used to enhance the quality of the products, rather than blind expansion. The company said the technological transformation can improve the production capacity of high-quality, low-odor and low-VOC products to improve automation and enrich the products structure.

Exhibit 6: Changes in capacity of Ningwu new material before and after technological reformation

From the technological reformation, the company expand polyether workshop 1 and workshop3, and made some adaptations in original production lines in workshop 2. But overall, the company's productivity has not been expanded.

To improve the quality instead of expanding blindly

In fact, thanks to the rapid development of polyurethane industry in our country, the productivity of polyether polyols in our country has maintained a rapid growth in recent years. In 2017, the output of polyether polyol in China is estimated to be about 3 million tons. However, from the perspective of capacity utilization, China's polyether polyols operating rate is about 45-55%, t which is not high. Therefore, there is an overcapacity in China's polyether polyol producing. And many polyether enterprises try to explore foreign markets to resolve overcapacity.

However, from the point of quality, there is still a gap between the quality of domestic polyether polyols and that of foreign chemical giants. Therefore, the IPO of Ningwu New Materials was a good starting. The goal of corporate financing is to improve the quality and efficiency rather than the expansion of capacity. IPO of Ningwu New Material is expected to benefit other polyether enterprises.


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