China Economic Net: another member in the listing matrix of Chinese Academy of Sciences Levima Technology entering the A-share market with two-wheel drive

On the morning of December 8, Levima New Materials Technology Co., Ltd. (stock abbreviation: Levima Technologies, stock code: 003022) officially landed on the SME board of the Shenzhen Stock Exchange.

According to the prospectus, before the issuance, Levima Group held 60.44% of Levima's shares, Guoke Holdings held 29.5%, and Guoke Holdings also held 29.04% of shares of Legend Holdings -- Levima's sole shareholder; after the issuance, Levima Group holds 51.77% of Levima's shares, and Guoke Holdings holds 25.27%.

 In 2017, 2018, 2019 and January-September 2020, the net profits of Levima Technology attributable to shareholders of the parent company were 55.197 million yuan, 229 million yuan, 532 million yuan and 423 million yuan, respectively, maintaining rapid growth. It is worth mentioning that in the first half of this year, affected by the "black swan" epidemic, a large number of domestic industries and enterprises with continuous production stopped production, resulting in a sharp drop in revenue and profit. Among them, the total profit of domestic petroleum and chemical industry decreased by nearly 60% year on year. Meanwhile, Levima Technology has maintained stable production and operation in this epidemic crisis. Its profit in the first half of 2020 is basically the same as that in the same period of last year. At the same time, it has successively launched new high-end polyether products for the construction industry and agricultural chemical industry, showing strong anti risk ability.

 The great competitive field creates strong enterprises. In recent years, hot spots in the field of new materials have emerged frequently, which has promoted many outstanding companies to receive the attention of the capital market.

 Levima Technology's rapid growth in recent years coincides with the strong development momentum of the new materials field where Levima Technology is located. According to the "Annual Report on the Development of China's New Materials Industry 2019" released by the National New Materials Industry Development Expert Advisory Committee on November 7, 2020, since the "Twelfth Five-Year Plan", the scale of our country’s new material industry market has expanded rapidly, from 0.8 trillion yuan in 2011 to 4.57 trillion yuan in 2019.

Under the macro background of consumption & industrial upgrading, the supporting role of new materials in our country's new urbanization construction, new infrastructure, new energy, intelligence and information technology has become more prominent. According to "Analysis of China’s New Materials Industry Status and Development Trends Report 2020-2025" by the China Research Institute of Puhua, benefiting from increased demand, policy support and strong investment from research institutes and enterprises, our country’s new materials industry will be in a period of rapid development at present and in the future. It is expected that the industrial scale will grow to 8 trillion yuan by 2025.

 According to the relevant data of China Petroleum and Chemical Industry Federation, at present, China's polymer materials such as polyolefin and special fine materials such as ethylene oxide derivatives have the structural problem of insufficient high-end products and surplus low-end products. The profits of different brands of products are significantly different, and the import dependence of some high-end new material products in China is high.

In the field of advanced polymer materials and special fine materials, Levima Technology's EVA, PP, EO and EOD products can be widely used in photovoltaics, cables, shoe materials, plastics, daily chemicals, textiles, construction, roads and bridges, and automobiles, leather, paint, agrochemical, metal processing and other fields. In recent years, Levima Technology's rapid profit growth is partly due to the relatively high proportion of high-end products in its product structure.

 For example, in Levima Technology's EVA products, the EVA products with high VA content account for 100%. According to the statistics of Jinlianchuang Information, in 2019, Levima Technology ranked first in the domestic EVA cable material market share and accounted for about a quarter of the domestic market share in the polypropylene thin-wall injection molding market.

In the direction of special fine materials, Levima Technology's performance is excellent in many aspects. In the fields of daily chemicals and textiles, Levima Technology has become a mainstream supplier of special non-ionic surfactants in China, and has been recognized by leading downstream companies such as Liby, Naais, and Blue Moon; In the field of metal processing, pesticides and coatings, various products such as special polyethers, green pesticide emulsifying and dispersing agents and water-based coating emulsifiers, have realized import substitution; in the field of construction, the self-developed viscosity-reducing and early-strength water-reducing agent products have been successfully applied to special construction fields such as ultra-high buildings, bridges, and subway segments, reaching the domestic advanced level; in the field of roads and bridges, the main products include concrete admixtures, construction engineering joint fillers (materials), and bridge construction tunnel grouting agents (materials), which are in a leading position in China.

 For large industrial enterprises, operation level is one of the key factors that determine their profitability.

  According to the prospectus information, Levima Technology currently operates many sets of devices, such as methanol-to-olefin (DMTO), ethylene-vinyl acetate copolymer (EVA), polypropylene (PP), ethylene oxide (EO), and ethylene oxide derivatives, and all adopt world-class technology. Among them, the DMTO device adopts DMTO process jointly developed by the Dalian Institute of Chemical Physics, Chinese Academy of Sciences and Sinopec Luoyang Petrochemical Engineering Company; the olefin separation utilizes the technology independently developed by Sinopec Luoyang Petrochemical Engineering Company. It is the first one-million-ton methanol-to-olefin-olefin separation integrated unit with completely independent intellectual property rights in China.

 Judging from the operation of some devices disclosed in the prospectus, Levima Technology's production and operation is at the leading level in the industry. Taking the methanol unit consumption of DMTO device as an example, it has continuously reduced the methanol unit consumption from 3.13t/t in 2017 to 2.88t/t in the first half of 2020 through the use of new catalysts, technological innovation and other methods. According to analysis by industry insiders, this methanol unit consumption data has obvious advantages among similar domestic DMTO devices. Especially for the annual million tons of methanol processing capacity, continuous reduction of methanol unit consumption is a strong support for the continuous improvement of its profitability. The OCC project in this Levima Technology fundraising projects has also attracted the attention of similar domestic enterprises with DMTO device. Through olefin catalytic cracking (OCC technology), the common by-products C4 & C5 of the DMTO device can be converted into higher value-added ethylene and propylene, further reducing the unit methanol consumption of the plant and improving the profitability of the company. 

Innovation ability is one of the core competitiveness of new material enterprises, and it is also the internal driving force for enterprises to continuously create new growth poles.

As of July 30, 2020, Levima Technologies has obtained 42 authorized patents, including 23 authorized invention patents, presided over and participated in the revision and formulation of 13 national and industry standards, and built a number of high-level innovation platforms, such as the national postdoctoral research station, the provincial enterprise technology center, and the provincial special fine chemicals engineering technology research center. In the field of special fine materials, Levima New Materials has developed more than 100 brands of alkoxylation products, successfully realized over 80 industrialized products, and made continuous breakthroughs in upstream and downstream extension products and technologies of high-end and differentiated alkoxylation.

In May 2017, Levima Technology received a strategic investment from the Chinese Academy of Sciences Holdings Co., Ltd. With the support of the Chinese Academy of Sciences, Levima Technology led the establishment of the "Chinese Academy of Sciences Chemical New Material Technology Innovation & Industrialization Alliance" in January 2018. It serves as the chairman unit, and more than 20 related institutes of the Chinese Academy of Sciences serve as director units. Through the "3+1" operation model, i.e., the "alliance + platform + fund" + one professional achievement transformation operation team, the Alliance has built a collaborative innovation system of "government, industry, education, research and funding". And, this collaborative innovation system will also bring Levima Technology the advantage of being in a favorable position for innovation resources.

Levima Technology’s chairman Zheng Yueming said in a recent interview that Levima’s new material operation is not a concept, but a real goal to give the company new material attributes and follows the trend. According to Zheng Yueming’s introduction, Levima’s 1.0 phase of strategy mainly focuses on "high-end Me too", aiming at products with a high degree of import dependence. While improving the company's operational capabilities and profitability, it has accumulated a large number of high-quality innovation resources; in the 2.0 phase of strategy after listing, Levima Technology will firmly seize the historic opportunity of our country’s industrial and consumption upgrades, adhere to the two-wheel-driven development model of “innovation-driven + operational improvement”, follow the direction of industrial and consumption upgrades. give full play to existing resource advantages, accelerate the creation of a leading industrial cluster in several subdivisions of new materials, commit to becoming an outstanding enterprise in the field of new materials, and strive to create greater value for customers, employees, shareholders, and society.