Wanhua chemical is suspected of “monopoly”: former partners call it “killing the chicken to get the egg”

“It’s been four years since we gave up Wanhua. Although they monopolized, they didn’t dare to suppress us openly. Otherwise, they didn’t lose all their bottoms?” On December 12, snowball user named “Ni Zhanggen” issued an article pointing out Wanhua chemical (600309. SH) “monopoly”. < / P > < p > “Ni Zhanggen” is the chairman of mengbaihe Home Technology Co., Ltd. (hereinafter referred to as “mengbaihe”, 603313. SH). According to the announcement of dream lily, its chairman is Ni Zhanggen. < / P > < p > according to the public information, Wanhua chemical used to be the MDI (diphenylmethane diisocyanate) supplier of mengbaihe. Dream lily is a listed company engaged in the production of memory mattress and other products. The main raw materials of its products include polyether, TDI, MDI, etc. Wanhua chemical is the main MDI manufacturer in China. As early as September 16 this year, Ni Zhanggen said in an article: “the reason behind the recent rise in the price of sponge raw materials is Wanhua chemical.” This kind of behavior will only be rejected by the market in the end. ” < / P > < p > according to Ni Zhanggen, in the ten years from 2008 to 2017, there was almost only one supplier of MDI, Wanhua chemical, who bought about 15000 tons of MDI. However, a person from the Securities Department of mengbaihe told China Business Daily: “at present, the supplier of MDI raw materials of the company has been replaced, not Wanhua chemical.” Wanhua chemical, founded in 1998, is mainly engaged in the research, production and marketing of polyurethane (MDI, TDI, polyether polyol), petrochemical products and fine chemicals. The actual controller is the state owned assets supervision and Administration Commission of Yantai City, and the shareholders of state-owned assets hold nearly 42% of its shares. At present, Wanhua chemical is one of the most important MDI suppliers in the world, with three domestic production bases in Yantai, Ningbo and Zhuhai, and an overseas production base of BC company in Hungary. Wanhua chemical’s 2019 annual report shows that it accounts for more than 40% of China’s MDI market share. At the same time, MDI related business is also the pillar of Wanhua chemical. In the past three years, polyurethane business including MDI contributed about half of Wanhua chemical’s revenue. Taking 2019 as an example, in the current revenue of 68 billion yuan of Wanhua chemical, polyurethane business contributed 31.8 billion yuan, accounting for about 47%. < / P > < p > a polyurethane industry analyst told the reporter: “MDI is a product with high concentration, high technical barriers, limited number of domestic production enterprises, and Wanhua chemical’s production capacity ranks first.” < / P > < p > another industry analyst also said: “at present, the main MDI manufacturers in China are Wanhua chemical, Shanghai kostrong, Shanghai BASF, Shanghai Huntsman, NPU (Ruian) and Chongqing BASF. Wanhua chemical’s production capacity accounts for 52%, with the highest market share. With the further expansion of its MDI production capacity, the market share will continue to increase. ” < / P > < p > however, in recent years, Wanhua chemical’s performance has been poor and its profitability has declined. According to wind data, from 2018 to 2019, Wanhua chemical’s revenue growth rates were 14% and – 7% respectively, and its net profit growth rates were – 5% and – 35% respectively. < / P > < p > in the first half of this year, affected by the epidemic situation, the MDI market was depressed, and the MDI production, sales and price of Wanhua chemical decreased, which led to its profit level being cut off. In the first half of 2020, Wanhua chemical achieved revenue of 30.9 billion yuan, a year-on-year decrease of 2%; the net profit attributable to shareholders of listed companies was 2.835 billion yuan, a year-on-year decrease of about 50%. At the same time, the scale of liabilities of Wanhua chemical increased from 52.9 billion yuan to 72 billion yuan, the current liabilities increased from 44.8 billion yuan to 61.6 billion yuan, and the debt ratio increased from 55% to 63%. < / P > < p > the reporter combed the price announcement of MDI in China released by Wanhua chemical and found that in May this year, the listing prices of aggregate MDI in the distribution market and direct market were 13500 yuan / ton and 14000 yuan / ton respectively, and the listing price of pure MDI was 15800 yuan / ton, all falling to the low point since March 2019.

said in novel coronavirus pneumonia and the international crude oil price drop in the first half of 2020, the volume and price of the company’s products were affected in the first half of the year. The price rebounded in the two quarter, but the demand for overseas markets declined significantly as the epidemic spread abroad. In June, August, September, October and November, Wanhua chemical raised the listing price of MDI five times, especially in the latest November. The amount of single increase reached a new high in recent years. Among them, the listing price of aggregate MDI in the distribution market and direct market increased by 5400 yuan per ton to 25000 yuan / ton, while that of pure MDI increased by 8200 yuan per ton to 28000 yuan / ton. < / P > < p > Ni Zhanggen said that the core definition of monopoly is to abuse one’s dominant market position. The relationship between upstream and downstream is fish and water, and any enterprise should have reasonable profits. “I will not agree with Wanhua chemical’s corporate culture. Not every company that makes money will be respected.” < / P > < p > in addition, due to the dispute over MDI price, mengbaihe also sued Wanhua chemical. After the first instance of the case, Meng Baihe refused to accept the judgment and chose to appeal; due to the emergence of new evidence in the second instance, the court of second instance recently decided to send the case back to the court of first instance for retrial. < / P > < p > in fact, in September this year, the issue of price increase in the polyurethane industry caused a heated discussion in the industry. At that time, the polyurethane products professional committee of China Plastics Processing Industry Association said that the soaring prices of upstream materials in the polyurethane industry chain not only impacted the sponge enterprises and upholstered furniture industry, but also led to the lack of competitiveness of polyurethane products, the loss of end customers, and ultimately backfired on upstream raw material enterprises. It called on the upstream “big brother” to consider in the long run, curb the irrational rise of raw material prices, and gradually fall back and stabilize in a reasonable range. < p > < p > Zhou Zhaofeng, managing partner of Beijing Feishi law firm, who has been engaged in anti-monopoly research for a long time, told the reporter: “Article 17 of the anti monopoly law on prohibiting monopoly with high price points out that it is necessary to declare that the suspected enterprise has a dominant position in the relevant market. According to Article 19 of the anti monopoly law, an enterprise with 50% market share in the relevant market will be presumed to have a dominant market position. ” < / P > < p > Zhou Zhaofeng further explained: “of course, enterprises presumed to have a dominant market position can prove that they do not have a dominant market position. If an enterprise with a dominant market position raises its price without increasing its cost, it is suspected of monopolizing the high price. Therefore, to judge whether a normal price rise or a price rise by borrowing a monopoly position mainly depends on whether the suspected enterprise has a dominant position and whether the relevant costs rise. ” < / P > < p > at present, the MDI price announcement disclosed by Wanhua chemical does not explain whether there is a correlation between price adjustment and cost. Wanhua chemical didn’t give a reply to the reporter about the accusation of suspected price monopoly. A person from the company said: “what we should disclose has been disclosed, and other questions can’t be answered.” < / P > < p > Disclaimer: the purpose of this article reprinted by CNFC is to convey more information, and it does not represent the opinions and positions of CNFC. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk. < p > < p > Chinanet is a state key news website under the leadership of the Information Office of the State Council and the management of China foreign language publishing and Distribution Bureau. Through 11 versions in 10 languages, the website publishes information 24 hours a day. It is an important window for China to carry out international communication and information exchange.