He Shihao, executive director of Yip's Chemical, said at the luncheon that the group's gross profit margin is expected to improve this year compared to last year
Last year's gross profit margin was 14.
7%, down 0.
6% year-on-year, mainly due to the loss of the new solvent product butyl acrylate due to low oil prices
He said that if there is no rapid drop in oil prices this year, the solvent gross profit margin will be better than last year, while the coatings business can benefit from the drop in oil prices and lower raw material costs, and the gross profit margin is also optimistic
In terms of the solvent business, he said that 300,000 tons of new capacity will be added this year, bringing the overall solvent capacity to more than 1 million tons, and sales are expected to increase by 100,000 tons
Among them, the oversupply in South China is mainly due to the relatively high market share of the group and large-scale production throughout the year.
Prices will be reduced to cope with overcapacity; the production capacity in East China will increase in the second half of the year, and production lines will be changed to introduce diversified products
He also said that the solvent business gross profit margin has always been between 8% and 12%, which is lower than that of the coatings business, but it accounts for 64% of the group's turnover.
In the future, it will continue to maintain stable income with the strategy of small profits but quick turnover
As for the coatings business, he said that this year's sales target for this business is to increase by 10% year-on-year, and the first quarter sales have achieved a 103% compliance rate
The Bauhinia Paint Group, which restructured its industrial coatings, civil coatings and resin businesses, came into effect on January 1 this year, and related one-time expenses were all spent last year.
He said that this year or next year will see the profits brought by the restructuring group
Among them, industrial coatings are actively expanding the digital coating market, while civil coatings will continue to maintain large-scale production capacity
He also said that the coatings business currently accounts for about 30% of the group's overall turnover, coupled with a higher gross profit margin than the solvent business, it is expected to become the main driving force for the group's profit growth in the future