Affected by COVID-19, Three Listed Rubber Machinery Companies in the Red in First Quarter

In April, four Chinese listed rubber machinery companies successively forecasted unaudited performance of 2020 Q1. Except for one company with a slight profit, the remaining three companies all suffered losses.

MESNAC, ranking the 3rd in the global top 36 rubber machinery companies, suffered a loss of 30 Million to 40 Million Yuan, with a relatively obvious decline compared with a profit of 18.09 Million Yuan in the same period last year; Tianjin Saixiang Technology Co., Ltd., which ranks the 12th, suffered a loss of 11,283.6 Thousand to 16,842.5 Thousand Yuan, with the loss situation slightly improved compared with a loss of 24,880.9 Thousand Yuan in the same period last year; New Universal Science and Technology Co., Ltd., which ranks the 26th, was the only profitable company with a net profit of only 1.1 Million to 3 Million Yuan, with a decrease of 83.42% to 93.92% compared with a profit of 18,097.4 Thousand Yuan in the same period last year; and Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. lost 16 Million to 19 Million Yuan, with also a year-on-year decline compared with a profit of 9,667.8 Thousand Yuan in the same period last year.

When analyzing reasons for changes, MESNAC be-lieves that due to the impact of COVID-19, the work and production resumption postpones, the supply from supply chain is impeded, and the delivery of customer ordering items is blocked, resulting in a decline in current operating income and a loss of net profit attributable to shareholders of listed company. This basically represents the voice of all rubber machinery companies at present.
Saixiang Technology, the only one seeing a significant increase in profit over the same period of the previous year, says that the first quarter is an off-season of industry sales, and the shipment volume is lower than that in other quarters due to the epidemic. The rise in raw materials and the greater pressure on tariffs keep the company in a loss state. However, the exchange gains generated by the US dollar held by the company due to exchange rate fluctuations have a positive impact on the profit in the first quarter, so the profit has increased significantly.

The four listed companies all believe that with the effective control of COVID-19 in China, it is expected that the performance of Q2 will gradually recover.

New Universal Science and Technology and Blue Silver Equipment say that subsequently, they will closely follow the progress of the epidemic, actively take measures to speed up the schedule and guarantee the time limit, speed up the delivery and acceptance of orders, and minimize the impact of the epidemic on production and operation to the greatest extent.

According to the statistics from China Rubber Machinery Professional Commission of China Chemical Industrial Equipment Association, the main economic indicators of China’s rubber machinery industry improved in 2019 compared with the previous year, with sales revenue reaching 10.6 Billion Yuan, an increase of 6%; an export delivery value achieving USD 420 Million, an increase of 31.2%; but profit index still growing negatively and the industry’s profitability being unsatisfactory.

Experts predict a high probability of decline in sales revenue in 2020 since the operation of rubber machinery enterprises mainly based on traditional products will be difficult, the order tasks will be insufficient, as well as the impact of COVID-19.