A-share subscription | Ruihua Technology (920099.BJ) opens subscription to become the leading provider of petrochemical technology in China.

On September 10th, Ruihua Technology (920099.BJ) started its subscription, with an issue price of 19 yuan/share and a subscription limit of 760,000 shares. The price-to-earnings ratio is 13.12 times, and it belongs to the Beijing Stock Exchange, with China Securities Co., Ltd. as its exclusive sponsor. The prospectus disclosed that Ruihua Technology is committed to providing comprehensive technical solutions based on chemical process packages for chemical enterprises. Its main products are chemical process packages, chemical equipment, and catalysts. The company's core business includes basic research experiments, process route and catalyst development, technology licensing, technical services, chemical equipment design and manufacturing, as well as new material technology development and preparation, making it a leading domestic provider of petrochemical technology. During the reporting period, the company's main operating income was categorized by product or service as follows: Ruihua Technology continues to research fine chemical technology and related product development, aiming to enter the high value-added environmental-friendly new materials market by planning to introduce technologies for degradable plastics such as PBS, PBAT, and high-end PS materials. It is reported that the funds raised by Ruihua Technology, after deducting the issuance expenses, are intended for the following projects: Financially, in 2021, 2022, and 2023, the company's operating income is expected to be approximately 142 million yuan, 326 million yuan, and 394 million yuan, respectively. The company's net profit is expected to be approximately 36.5729 million yuan, 78.6147 million yuan, and 114 million yuan, respectively. It is important to note that the prospectus specifically warns investors to pay attention to the risks of downstream industry overcapacity and declining market sentiment. In recent years, due to the continuous promotion of supply-side structural reform, the integration of refining and chemical industry, and the influence of policies such as "carbon neutrality" and "peak carbon", downstream industries such as styrene, epoxy propane, and succinic anhydride have seen a gradual release of new production capacity, but demand growth has slowed down, leading to a narrowing of the supply-demand gap. According to Sublime China Information statistics, in 2023, China's styrene supply-demand gap is 424,600 tons, a decrease of 26.88% year-on-year; and the epoxy propane supply-demand gap is 341,400 tons, an increase of 16.76% year-on-year. If the phenomenon where the release of downstream industry capacity outpaces demand growth cannot be improved in the future, the risk of downstream industry overcapacity and declining market sentiment may arise, leading to the transmission of downstream structural overcapacity risks to the chemical technology service industry and the chemical equipment manufacturing industry. This could result in the suspension of construction or production of some chemical projects, reducing downstream customers' demand for process packages, equipment, and catalysts, thereby impacting the company's future profitability.