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China Fund News reporter Niu Siruo

On August 5, Zhengdan Co., Ltd. released its 2024 mid-year performance announcement, with a net profit of 286 million yuan in the first half of the year, a year-on-year increase of 1015.51%.

As the first "ten-fold stock" of the year, Zhengdan's performance in the first half of 2024 was also very impressive. Benefiting from the price increase of its main product TMA, Zhengdan achieved a record high performance in the past decade.

Profits increased more than tenfold

On the evening of August 5, Zhengdan Co., Ltd. disclosed its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 1.382 billion yuan, a year-on-year increase of 86.52%; net profit was 286 million yuan, a year-on-year increase of 1015.51%, setting a new performance record in the past decade.

It is reported that Zhengdan Co., Ltd.'s main business involves the fine chemical industry and the environmental protection new materials industry. Its current main products include trimellitic anhydride (TMA), trioctyl trimellitate (TOTM), vinyl toluene (VT), durenyl, etc.

TMA is an important high-molecular organic compound and a high-end product in the fine chemical industry segment. It is widely used in environmentally friendly plasticizers, high-end powder coatings, high-grade insulating paints, high-grade lubricants and high-temperature curing agents.

Zhengdan Co., Ltd. stated that during the reporting period, due to the unstable and tight supply from overseas TMA manufacturers, the overseas market's demand for Chinese TMA increased significantly, and the sales volume and unit price of the company's main product TMA both increased significantly compared with the same period last year.

At the same time, the sales volume and unit price of TOTM products also increased compared with the same period last year, and the company's operating income increased significantly year-on-year; with the continuous release of the company's TMA and TOTM production capacity, the scale effect gradually emerged, and the cost-to-income ratio dropped significantly, resulting in a substantial increase in net profit attributable to shareholders of listed companies.

TMA market size growth

Since the beginning of this year, domestic TMA prices have been rising. According to Minsheng Securities research data, on July 26, 2024, the TMA price was 52,750 yuan/ton, a weekly increase of 7% and an annual increase of 324%.

With the sharp rise in TMA prices, Zhengdan shares became the "most popular" A-share in 2024. Zhengdan shares' stock price has fluctuated upward since February 7, reaching a peak of 36.65 yuan per share on June 13. Since the beginning of this year, Zhengdan shares' stock price has risen by 383.48%.

It is worth noting that on July 31, Zhengdan Co., Ltd. stated on the investor interaction platform that the company's TMA production capacity is 85,000 tons/year, making it the world's largest TMA supplier.

In addition, Zhengdan Co., Ltd. is further expanding its production scale. In June this year, Zhengdan Co., Ltd. announced that it plans to invest 350 million yuan to build a green upgrading and transformation project with an annual output of 65,000 tons of TMA to fill the market gap and better meet the needs of downstream customers.

According to a survey by Betzers Consulting, the global TMA market size will reach 3.377 billion yuan in 2022. It is predicted that by 2028, the market size will reach 4.47 billion yuan, and the global TMA market is expected to grow at a compound annual growth rate of 5%.

Guolian Securities Research and Analysis stated that the actual demand in 2024 can be quantified to about 211,000 tons, and the supply gap will reach 63,000 tons, accounting for about 30% of the actual total demand. Combined with the rigid demand attribute of TMA and the lack of new production capacity in the short term, the high prosperity cycle of TMA is expected to continue for a long time.

Editor: Joey

Audit: Wooden Fish

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