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Yangtze Business Daily News●Huang Cong, reporter of Yangtze Business Daily

As the leader in the domestic ethylene oxide fine chemical industry, Oak Holdings' performance continues to be sluggish.

On the evening of August 5, Oak Holdings (300082.SZ) released its 2024 semi-annual report showing that the company achieved operating income of 1.836 billion yuan, a year-on-year decrease of 10%; net profit loss of 101 million yuan, a year-on-year increase of 32.87%; non-net profit was -110 million yuan, a year-on-year increase of 30.81%.

A reporter from the Yangtze Business Daily found that Oak Holdings' net profit has accumulated a loss of 410 million yuan in the past year and a half, and its non-net profit has accumulated a loss of 470 million yuan in the past two and a half years.

Oak Holdings stated that the company's performance loss was mainly due to insufficient effective demand in the market for its leading products. At the same time, product prices were under pressure, and the company's sales revenue declined, resulting in a serious decline in gross profit.

Data shows that as of the end of the first half of 2024, Oak Holdings' cash and cash equivalents reached 409 million yuan, a year-on-year decrease of 35.41%; short-term loans and long-term loans were 1.558 billion yuan and 187 million yuan, respectively, a year-on-year increase of 13.31% and 10.09%, respectively. The company's cash on the books is tight.

On the evening of August 5, Oak Holdings also announced that the company had terminated its cooperation with Sinopec Asset Management Co., Ltd. on the new investment project of Tianjin Polyether New Materials Co., Ltd. (under preparation).

Previously, the two parties agreed that Oak Holdings would invest RMB 250 million in cash and jointly invest with Sinopec Asset Management Company to establish Tianjin Oak Polyether Co., Ltd., in which Oak Holdings would hold a 60% stake.

Regarding the termination of the cooperation, Oak Holdings stated that due to major changes in the market environment of the cooperation project, and the failure to complete many related preparatory work agreed upon by both parties as scheduled and in compliance with regulations, the purpose of cooperation agreed upon in the joint venture contract could not be achieved.

After deducting non-recurring items, the company suffered a loss of 470 million yuan in two and a half years

Oak Holdings is a domestic manufacturer of green, low-carbon, fine chemical new materials derived from ethylene oxide with the most complete industrial layout, the largest scale and the widest distribution. It is also one of the world's largest suppliers of green, low-carbon, fine chemical new materials derived from ethylene oxide.

According to information, Oak Holdings owns 50,000 cubic meters of low-temperature ethylene storage tanks, and has a standard production capacity of 300,000 tons of commercial ethylene oxide and 1.6 million tons of ethoxylation.

At present, AOK Holdings has formed two major product segments: traditional epoxy derivatives such as water reducer polyether monomers and green surfactants, and new energy and new materials such as carbonate series and polyethylene glycol for battery materials.

However, as a leading company in the industry, Oak Holdings' performance in recent years has not been ideal.

From 2021 to 2023, Oak Holdings' operating income was RMB 6.717 billion, RMB 5.639 billion and RMB 3.813 billion, respectively, up 17.67%, -16.05% and -32.39% year-on-year, respectively, which has declined for two consecutive years; the net profit was RMB 352 million, RMB 5.5955 million and -309 million, respectively, down 12.54%, 98.41% and 5621.07% year-on-year, respectively. Not only has it declined for three consecutive years, but it has also fallen into losses; the non-net profit was RMB 338 million, -27.5676 million and -332 million, respectively, down 9.94%, 108.17% and 1103.35% year-on-year, also declining for three consecutive years, and has been in the red for two consecutive years.

On the evening of August 5, 2024, Oak Holdings released its 2024 semi-annual report showing that the company achieved operating income of 1.836 billion yuan, a year-on-year decrease of 10%; net profit loss of 101 million yuan, a year-on-year increase of 32.87%; non-net profit was -110 million yuan, a year-on-year increase of 30.81%.

From this point of view, Oak Holdings' net profit has accumulated a loss of 410 million yuan in the past year and a half, and its non-net profit has accumulated a loss of 470 million yuan in the past two and a half years.

Regarding the loss in the first half of 2024, Oak Holdings said that it was mainly due to insufficient effective market demand for its leading products, as well as relatively overcapacity and intensified industry competition, which put pressure on product prices and caused a serious decline in gross profit due to a decline in the company's sales revenue. The company has taken a series of measures, including customer-centric overall marketing management, raising subsidiaries to operating entities, and combining market orientation with industry focus, to actively achieve the goal of reducing losses and increasing efficiency.

The project was terminated after more than two years of planning

Due to poor performance, Oak Holdings also terminated the cooperation project.

On the evening of August 5, Oak Holdings announced that the company's board of directors agreed to terminate the company's cooperation with China Petroleum & Chemical Corporation Asset Management Co., Ltd. (referred to as "Sinopec Asset Company") on the new investment project of Tianjin Polyether New Materials Co., Ltd. (under preparation).

More than two years ago, in April 2022, the board of directors of Oak Holdings passed a resolution agreeing that the company would participate in the investment in a new project of Tianjin Polyether New Materials Co., Ltd. (under preparation) at an appropriate price based on the latest audited financial data and other information of the Polyether Department of Tianjin Petrochemical Branch of Sinopec Assets Company (referred to as "Tianjin Petrochemical Polyether Department") announced by the Beijing Equity Exchange.

In May 2022, Aoke received the "Notice of Confirmation of Qualification of Potential Investors" issued by the Beijing Equity Exchange, confirming that the company is a qualified potential investor. On the same day, the company signed the "Joint Venture Contract" with Sinopec Asset Management Co., Ltd.

At that time, the parties to the contract determined that the market value of Tianjin Petrochemical Polyether Department was RMB 166 million. The two parties agreed that Aoke Holdings would invest RMB 250 million in cash and Sinopec Assets Company would invest RMB 166 million in assets of Tianjin Petrochemical Polyether Department to jointly invest in the establishment of Tianjin Aoke Polyether Co., Ltd., of which Aoke Holdings held 60% of the equity of the joint venture and Sinopec Assets Company held 40% of the equity of the joint venture. The total investment of the joint venture was RMB 416 million, and the part of the raised funds exceeding the registered capital calculated according to the shareholding ratio of the capital increase party was fully included in the capital reserve of the joint venture.

In the latest announcement, Oak Holdings stated that since the company's board of directors reviewed and approved the investment cooperation project, the company has actively fulfilled the obligations stipulated in the joint venture contract signed by both parties and cooperated with the relevant parties of the transaction to promote the progress of the project. However, due to major changes in the market environment of the cooperation project, many of the relevant preparatory work agreed by both parties failed to be completed as scheduled and in compliance with regulations, and the purpose of cooperation stipulated in the joint venture contract could not be achieved.

The participating company withdrew its listing application

Currently, the main operating indicators of Oak Holdings are not performing well.

As of the end of the first half of 2024, Oak Holdings' cash and cash equivalents reached 409 million yuan, a year-on-year decrease of 35.41%; short-term loans and long-term loans were 1.558 billion yuan and 187 million yuan, respectively, a year-on-year increase of 13.31% and 10.09%, respectively. The company's cash on the books is tight.

Moreover, as of the end of the first half of 2024, Oak Holdings' contract liabilities reached 59.8057 million yuan, a year-on-year decrease of 41.45%, indicating that the company's performance is likely to decline further.

In 2022, 2023 and the first half of 2024, Oak Holdings' R&D expenses were RMB 55.7532 million, RMB 54.1313 million and RMB 21.1960 million, respectively, year-on-year increases of 11.43%, -2.91% and -17.70%, respectively, and have been declining for one and a half years in a row.

In fact, the bad news about Oak Holdings is not just its continued losses and failed cooperation.

On June 28, Aoke Holdings released an announcement on the pledge of some shares of the controlling shareholder, showing that the controlling shareholder Aoke Holding Group Co., Ltd. (hereinafter referred to as "Aoke Group") holds 360 million shares of the company, accounting for 52.89% of the company's total share capital. After pledging 3.8241 million shares, the cumulative number of shares pledged by Aoke Group is 51.4441 million shares, accounting for 14.30% of its holdings and 7.56% of the company's total share capital.

On April 30, the Shenzhen Stock Exchange disclosed that Suzhou Huayi New Energy Technology Co., Ltd. (referred to as "Suzhou Huayi") recently submitted an "Application for Withdrawal of Application Documents for Initial Public Offering and Listing on the Growth Enterprise Market" to the exchange. The Shenzhen Stock Exchange decided to terminate the review of the company's initial public offering and listing on the Growth Enterprise Market.

According to information, Suzhou Huayi is an enterprise focusing on the research, development, production and sales of lithium-ion battery electrolyte additives.

Currently, Oak Holdings holds 31.5001% of the shares of Suzhou Huayi and is a shareholder of the listed company.

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