() The business review of the Board of Directors in the first half of 2023 is as follows:
I. Description of the industry and main business of the company during the reporting period.
The company is mainly engaged in the mining of salt mines, the production and sales of salt and salt chemical products. The main products include salt, industrial salt, small industrial salt and soda ash. According to the Guidelines for Industry Classification of Listed Companies (revised in 2012), salt belongs to the food manufacturing industry in manufacturing industry (C14); Two alkali industrial salts and small industrial salts are "chemical raw materials and chemical products manufacturing" in "manufacturing" (C26); Soda soda is "inorganic alkali manufacturing" (C2612) in "chemical raw materials and chemical products manufacturing".
1. Salt industry:
According to the classification of uses, salt products can be divided into salt, alkali industrial salt and small industrial salt. Salt is a necessity of people’s life, and its sodium element is an indispensable element in human growth and development; The industrial salt of caustic soda is the main raw material of caustic soda industry, which is mainly used for the production and manufacture of caustic soda and soda ash. Small-scale industrial salt is an industrial salt other than alkali industrial salt, which is mainly used in printing and dyeing industries. The production and sales of industrial salt and small industrial salt mainly depend on the downstream operation of the two alkali industries, and the price cycle is obvious. The production and sales of edible salt are relatively stable, and there is basically no periodicity. From the point of view of product price, after the reform of salt industry system, the wholesale price of salt dropped obviously, but the price of salt in Shangchao terminal remained basically stable, and the profit shifted from wholesale enterprises to retail enterprises. Generally speaking, the existing domestic salt production capacity is greater than the consumption demand, and there is a certain degree of oversupply. Therefore, enterprises with integrated production and marketing and strong channel control ability are more capable of coping with challenges.
2, soda ash industry:
Soda industry belongs to the middle reaches, and the relationship between supply and demand determines the price of soda, while the price of raw salt and energy determines the cost, and the price and cost jointly determine the gross profit margin of soda industry. From the perspective of market players, China’s soda ash industry is an industry dominated by medium and large enterprises, with a relatively high concentration. The research and development of technologies, equipment and materials related to the treatment of "three wastes" and energy saving and consumption reduction have promoted the continuous strengthening of technological innovation, equipment upgrading and clean and efficient energy utilization in China’s soda industry, and accelerated the transformation and upgrading from low-end manufacturing to high-end manufacturing. Under the influence of domestic macro-economic environment, soda ash industry has a certain periodicity, which mainly depends on the development needs of downstream photovoltaic glass, flat glass, daily glass, synthetic detergent, alumina and other industries.
3, salt cave oil and gas storage industry:
China is the second largest consumer of oil and natural gas in the world, and its dependence on foreign countries is high. In the face of the continuous turbulent international situation, the problem of energy security is becoming more and more serious. The country has successively issued a number of energy security or reserve policies, energy security is gradually rising to a national strategy, and oil and gas reserves have ushered in a period of development opportunities. The National Development and Reform Commission and the National Energy Administration pointed out in their guidance on energy security that "the construction of gas storage facilities should be accelerated. Do a good job in the overall planning and layout of underground gas storage and LNG storage tanks, and promote the intensive and scale construction of gas storage facilities. " Provinces (autonomous regions and municipalities) have compiled and issued special plans for the construction of provincial gas storage facilities, and encouraged local governments and relevant enterprises to share the investment and construction costs and benefits of gas storage facilities through cooperation in different places and joint ventures.
Second, the discussion and analysis of the business situation
In the first half of 2023, the company produced a total of 4,445,800 tons of salt and salinized products, an increase of 551,800 tons year-on-year, an increase of 14.16%; The production enterprises achieved a cumulative sales of 3,635,700 tons, an increase of 490,800 tons or 15.61% year-on-year, and a cumulative sales of 2,238,600 cubic meters of brine, an increase of 138,200 cubic meters or 6.58% year-on-year. The operating income was 2.901 billion yuan, a decrease of 4.23% compared with the same period last year. The basic earnings per share is 0.51 yuan. The main reason is that the same period of last year was a historical extreme, and the price of salt products fluctuated and fell during the reporting period, but compared with the average of the same period in 2020, 2021 and the same period in 2020 -2022, it still maintained a high growth level.
(a) steady investment, construction projects, the development potential continues to increase.
Guided by the new development pattern of "salt+energy storage" industry in the Tenth Five-Year Plan, the company made every effort to promote the construction of key projects under construction. The company and PetroChina Gas Storage Company jointly established Guoneng Company to promote the construction of the first phase of Zhangxing Gas Storage Project, and completed the main projects such as comprehensive building and auxiliary production houses, the main construction of the opening and closing station and the installation of major equipment such as power supply system. Well ZXK4-B and Well ZXK4-A were respectively connected with the target area, and well SY3 completed the plugging operation. At present, the construction period is reversed, the project is accelerated, and gas injection trial production is achieved during the year. Promote the comprehensive utilization project (Phase I) of brine salt production in gas storage, in which the preliminary administrative licensing work such as filing, energy assessment, safety assessment, environmental assessment and stability assessment has been completed for the refined liquid salt project, and the filing and energy assessment for the main salt production project has been completed. Set up a special class of sodium battery-grade soda ash product research and development project, speed up the research and development of production technology, and the product indicators meet the needs of target customers, which has now been transferred to the pilot stage.
(2) Stabilize production and expand channels, and continuously consolidate competitive advantages.
Give full play to the decision-making role of the marketing committee and the advantages of integration of production and marketing, strengthen the overall scheduling of production resource elements, scientifically organize parallel production, collaborative operation and linkage maintenance, pay close attention to the management of material consumption and energy consumption cost, accelerate the promotion of "intelligent change to digital transformation" and promote the long-term safe and stable operation of production. Solidly promote the construction of market channels inside and outside the province, and thoroughly implement the "spring ploughing action" in the provincial market. The sales of various salt products maintained a good momentum, and the proportion of Huai salt reached 84.34%. Continue to promote the "Spark Plan" in the market outside the province, make a new breakthrough in the sales of small packaged salt in the market outside the province, and further expand the influence of the market outside the province. The export business grew rapidly, and the salt products were exported to more than 30 countries and regions, such as Japan, South Korea, Southeast Asia, the Middle East, Europe and America, and were selected as "Sample Enterprises of China’s Foreign Trade Export Leading Index" in 2022. Declared China Time-honored Brand and China Quality Award, and was selected as one of the 100 typical cases of brand building of state-owned enterprises in the State Council SASAC for two consecutive years. Successfully held the "China Quality Miles-Huaiyan Bank and Huaiyan Quality Brand Conference", and released a series of new salt products, which won wide attention and praise from the market.
(3) Steady reform and innovation, and continuous improvement of endogenous motivation.
Deepen the new round of state-owned enterprise reform and deepen the promotion action. Focus on accelerating the construction of modern enterprise system, establish and improve the market-oriented operation mechanism system, and comprehensively establish the corporate governance model with the characteristics of Su Yanjing. Deepen the reform of "three systems" and stimulate the endogenous motivation and vitality of enterprises. Increase investment in scientific and technological research and development, focus on new product development, technical research, comprehensive utilization of salt cavities and other key tasks, and include 49 research and development projects such as intelligent storage of national reserve salt in the 2023 R&D project plan. In the first half of the year, 4 achievements at the municipal level and above were achieved, and 3 production problems and technical research problems were solved. Complete 4 key research achievements (items) of gas storage, energy storage and other cavity utilization technologies, and complete 2 pilot projects of new products; 9 patents (including 6 inventions) were accepted, and 6 patents (including 4 inventions) were authorized. Scientific and technological innovation was rated as a typical experience of national promotion of state-owned enterprise reform for three years by the State Council State-owned enterprise reform leading group office.
(4) Maintain safety and prevent risks, and continuously improve the governance system.
Deepen the promotion of benchmarking world-class management, strengthen supervision and assessment, and promote efficiency, effectiveness and effectiveness. Strengthen the construction of safety production system, do a good job in safety inspection and hidden danger management, formulate and issue the "double prevention management measures for safety risk classification management and hidden danger investigation and management", conduct a comprehensive physical examination of the double prevention system of each production unit, further consolidate the basic management of safety production, and continue to maintain a stable situation in safety production. Pay close attention to the quality management of salt and further improve the quality management system. We will promote the construction of enterprises governed by law and compliance management system, and determine the negative list behavior units of partners around key areas of compliance management. Actively carry out internal control audits and conduct special inspections on the implementation of internal control systems of six municipal salt companies. Organize research on contract risk prevention and control, strengthen the management of monetary funds and bills, and continuously improve the compliance management level and risk prevention ability.
Third, risk factors
(A) Macroeconomic cyclical risks
The main products of companies such as industrial salt and soda ash belong to basic chemical raw materials, which are closely related to the macroeconomic prosperity and the development of downstream industries. If the uncertain macroeconomic factors in the future lead to unsatisfactory economic recovery and weak downstream demand, and the release of production capacity in some regions affects market prices, it will put some pressure on the sustained and rapid growth of the company’s performance. The company will closely follow the market changes, adjust its business strategy and product structure in a timely manner, and make a good combination of technology, technology, equipment and management advantages, and strive to resolve the adverse effects brought about by changes in the economic environment.
(B) the challenges brought by market-oriented competition
The competition in the domestic salt market is becoming more and more fierce, and the gross profit space is squeezed. The company will actively seize the policy opportunity to stimulate the economy and promote consumption, give full play to the advantages of production and marketing, further strengthen the coordination of production and marketing, channel construction and sales resource integration, cultivate the market demand for high-quality and high value-added products, consolidate the domestic and foreign market share through multiple channels, and ensure the leading position in the industry.
(C) the risk of energy price fluctuations
Coal is the main energy needed by the company to produce salt and salt chemical products, and its price fluctuation has a great influence on the gross profit margin of the company’s products. The company mainly adopts the mode of linking factories and mines and direct procurement to reduce trade links, strive to reduce coal procurement costs, and actively respond to the risk challenges brought about by coal price fluctuations.
(D) Safety and environmental risks
As a large salt chemical production enterprise, there is a certain pressure of safety and environmental protection. With the continuous strengthening of energy consumption constraints and environmental protection requirements, it has a certain impact on the daily production organization of enterprises. As a green mining enterprise and a national-level green demonstration factory, the company has always adhered to the concept of green ecological development, continuously increased the investment in safety and environmental protection equipment, strengthened the safety training and daily management of employees, prevented illegal operations and emissions, and put an end to safety and environmental accidents.
Iv. analysis of core competitiveness during the reporting period
The company’s salt production capacity ranks among the best in China’s salt industry, with six core competitive advantages: "circular economy, mineral resources, regional transportation, technological innovation, integration of production and marketing, and well-known brands".
(A) advantages of circular economy. The company’s industrial system centered on "comprehensive utilization of rock salt resources and technological innovation of circular economy" has obvious advantages of circular economy. The self-developed "Downhole Circulating Soda Making Process" was included in the implementation guide of energy-saving technical transformation and upgrading in 2025 by the Ministry of Industry and Information Technology and other four ministries and commissions of the National Development and Reform Commission. It has been authorized to be used by other enterprises in the industry and has been popularized and applied in the industry. Guided by the "14th Five-Year Plan", the two chains of "circular economy industrial chain of saline-alkali calcium" and "industrial chain of salt cavity energy storage" have been built in depth, which have accumulated the advantages of salt cavity resources, brine consumption and technological innovation, and constructed a new development pattern of "salt+energy storage" industry.
(2) Advantages of mineral resources. The company has mineral resources with abundant reserves, excellent quality, thick deposits, high salt content and high salt grade. The mining rights of eight mining areas, including Zhangxing Salt Mine, Xiaguan Salt Mine, Jiangnan Salt Mine and Shitang Salt Mine, have a total reserve of 12.14 billion tons of ore, 7.094 billion tons of NaCI, 1.105 billion tons of associated Na2SO4 and a permitted production scale of 11.94 million tons/year. The company selects high-grade mining areas for salt production, which ensures the excellent quality of salt products. Abundant salt mine resources ensure the continuous supply of brine for salt and salt chemical products and the expansion of salt cavity economy, which has obvious advantages in the industry.
(3) Location traffic advantages. The company is located in Huai ‘an City, Jiangsu Province, and the economy in East China is active. It is an important production area of soda ash, chlor-alkali and other chemical industries. The market demand for salt and salt chemical products is large and it has a good location advantage. Small-scale industrial salt, alkali salt and sodium sulfate have a certain sales radius. Compared with other modes of transportation, the company adopts water transportation and has built its own wharf in the Beijing-Hangzhou Grand Canal, which has a longer sales radius and lower cost. Beijing-Shanghai, Tongsan, Ninglian and other expressways meet in China, and the Xinchang Railway runs through the territory, which is very convenient for land and water transport, creating unique conditions for the company to participate in market competition.
(4) Advantages of technological innovation. The company won the first "Jiangsu Science and Technology Innovation and Development Award Excellent Enterprise" and "Jiangsu Manufacturing Outstanding Contribution Award Excellent Enterprise" and other honors. Focusing on building a new pattern of "salt+energy storage" industry, increasing investment in scientific and technological research and development, focusing on key tasks such as new product development, technical research, and comprehensive utilization of salt cavities, 49 research and development projects such as intelligent storage of national reserve salt were included in the 2023 R&D project plan. In the first half of the year, 4 achievements at the municipal level and above were achieved, and 3 production problems and technical research were solved. Complete 4 key research achievements (items) of gas storage, energy storage and other cavity utilization technologies, and complete 2 pilot projects of new products; 9 patents were accepted (including 6 inventions) and 6 patents were authorized (including 4 inventions).
(5) Advantages of integrated production and marketing. The company is one of the few salt enterprises with integrated salt production and marketing in China. It pays attention to and strengthens the construction of marketing system, sets foot in the fields of channel construction, new product development and e-commerce more quickly, and promotes the reasonable growth of marketing work and the effective improvement of quality. It is in the leading position in salt sales radiation range, sales network service response, sales ratio inside and outside the province, and its business innovation ability and market competitiveness continue to increase, and its corporate reputation and social influence continue to increase.
(6) Advantages of well-known brands. The company vigorously implements the "three products" strategy, aims at high-end internationalization of the brand, creates "Millennium Huaiyan", shapes the first-class brand, and enhances the corporate brand and product image. "Jingshen" trademark is a famous trademark in Jiangsu Province, and "Huai" brand is a well-known trademark in China. The company has successively won the Top Ten Enterprises in China Light Industry Salt Making Industry, the Top 100 Enterprises in China Light Industry and the Top 50 Enterprises in China Light Industry Food Industry, and has successively won many awards such as Jiangsu Provincial Governor’s Quality Award, the 18th National Quality Award, the Asian Quality Excellence Award and the First Jiangsu Boutique. Natural edible salt, seaweed iodine edible salt, natural calcium edible salt and other products have been recommended as upgraded and innovative consumer goods by the Ministry of Industry and Information Technology.