Comments on the Management of Jiangyan Group’s 2023 Annual Board of Directors
() The operating comments of the Board of Directors in 2023 are as follows:
I. Discussion and analysis of business conditions
In 2023, the company actively responded to the complicated and ever-changing external situation, overcame difficulties, achieved record highs in business performance, increased employees’ income simultaneously, achieved the overall listing goal, made steady progress in reform and deepening, made breakthroughs in innovation, improved the governance system day by day, demonstrated its social responsibility, pushed forward the party in depth, successfully closed the year and handed in satisfactory answers, and the company’s high-quality sustainable development entered a new historical stage.
Marketing. The first is to strengthen brand promotion. Formulate and implement the annual brand promotion plan, organize and carry out a series of publicity activities such as "5.15" public welfare publicity, "Jiangxi is the world’s delicious and delicious in Jiangyan", "Lighting the Twin Towers and making the city beautiful together", promote strategic cooperation with catering industry associations in Jiangxi Province and various cities, and strengthen terminal publicity such as supermarkets, small shops in urban and rural areas and farmers’ markets. Vigorously promote () business integration development, formulate e-commerce development plans, and enhance the brand influence on the head e-commerce platform. The second is to increase the synergy between production and sales. During the reporting period, four new varieties of salt, such as small package grain salt, were introduced. The trial production of 99.8% high-purity salt was successful, calcium chloride was put into production smoothly, and the product structure was enriched and optimized. We will continue to improve the management of product transportation and unified warehouse allocation, coordinate production logistics and transportation, ensure the stable supply of salt market, and promptly and effectively quell the "8.24" salt snapping storm in the province. The third is to fully increase market share. We will fully seize market opportunities, serve the development of new energy industry chain in the province, increase strategic cooperation with high-quality leading enterprises such as lithium batteries, photovoltaics and glass, and further optimize the customer structure of soda ash. Firmly grasp the main force of salt supply in channel positioning, and during the reporting period, the sales volume of small packaged salt in the province exceeded 100,000 tons, with a market share of over 70%, a record high since the salt reform. Fourth, the export scale has grown steadily. During the reporting period, seven new exporting countries, including Britain, Saudi Arabia, New Zealand and United Arab Emirates, exported 368,800 tons of products and earned about US$ 45.19 million. According to the data released by the General Administration of Customs,The company’s salt export accounts for more than 30% of the total national salt export for many years, and its export share is leading the country. Among them, the company’s export of salt to Hong Kong accounts for over 80% of the total export of salt from the Mainland to Hong Kong, and the export of salt to Vietnam accounts for over 70% of the total export of salt from China to Vietnam.
Production and operation. The first is to ensure the steady operation of production. Make full use of the intelligent factory platform, strengthen the management and optimization of the whole production process, strengthen the equipment operation management, keep the dynamic steady-state operation time above 95%, and the annual output of saline-alkali calcium products has reached a new high. The second is to continue to tap the potential internally. The results of energy saving, carbon reduction and consumption reduction are obvious. The average steam consumption of alkali products decreased by 7.84% and limestone consumption decreased by 4.93%. The energy consumption of light and heavy soda ash decreased by more than 6% year-on-year, approaching the national benchmark level; Increase the technological transformation of energy-saving process equipment. A number of energy-saving technical transformation projects, such as waste heat recovery of steam condensate from soda calcination, high-temperature resin water production in power plant and waste heat recovery of secondary condensate from salt and calcium, have been completed successively, saving 10,000 tons of standard coal annually. Strengthen the management of procurement bidding, optimize the procurement pricing mechanism of important bulk raw materials such as coal, and further reduce the procurement cost. Constantly broaden the cooperation channels of logistics and transportation, and strive to reduce logistics costs. The third is to guard the bottom line of product quality. Carry out special actions to improve quality, strengthen the construction of quality management system, and strictly implement three-level quality grid monitoring. Successfully passed the on-site audit of the replacement certificate of the national salt fixed-point production enterprises. Build a high-standard testing laboratory and pass the on-site evaluation by China National Accreditation Committee for Conformity Assessment (CNAS).
Scientific research and innovation. Companies adhere to the market-oriented, strategy-driven, relying on innovative platforms to promote the construction of science and technology center projects, strengthen cooperation with Industry-University-Research of Chinese Academy of Sciences, East China University of Science and Technology and other research institutes, and focus on technological innovation and key technology research in process upgrading, energy saving and emission reduction, new product research and development, carbon capture and utilization, lithium extraction from brine, salt cave energy storage (gas), digital transformation, etc. Jointly applied for the research project of Jiangxi Province’s major scientific and technological research and development project "Research and demonstration of key technologies of compressed air storage power generation in salt caves" in 2023, completed the registration of five scientific and technological achievements, obtained six software copyrights in intelligence, and obtained 37 new authorized patents, including four invention authorized patents. The affiliated company, Jingyao Salinization, was selected as the "5G+ Industrial Internet" demonstration enterprise in 2023 and the third batch of manufacturing pilot (cultivation) enterprises in Jiangxi Province; The affiliated enterprises Fidelity Salt Chemical and Jiangyan Packaging were awarded the title of "Innovative Small and Medium-sized Enterprises in Jiangxi Province" and "Specialized and Special New Small and Medium-sized Enterprises in Jiangxi Province" in 2023. Jiangyan Packaging also won the honorary title of "Jiangxi Science and Technology SMEs" in 2023.
In terms of project construction. The company firmly established the concept of "project is king". During the reporting period, Fidelity retired from the city and entered the garden, and the intelligent project of 600,000 tons/year salt products entered the final stage. The trial production of the whole line of small packaging was completed, which has met the production conditions and is expected to be put into production in April 2024. The pipe network of the cogeneration central heating project in Zhangshu Industrial Park has been completely completed, and the power access system has completed the interconnection of important equipment, which is expected to be completed and put into operation in the third quarter of 2024. The high-strength calcium sulfate project changed from technical research to achievement transformation stage, which broke ground in December and is expected to be put into production in the second quarter of 2024. The energy-saving technical transformation project of soda plant was promoted in an orderly manner. The procurement of related equipment and the bidding for building construction have been completed. The energy-saving technical transformation project of salt and nitrate plant has been completed, and it has the conditions of single machine and linkage commissioning, and it will enter the trial production stage in the first quarter of 2024. Science and Technology Innovation Center completed the project establishment and design work.
Governance efficiency. The company focuses on standardized governance and improves management efficiency in all directions. First, the three-year action of reform and innovation ended with high quality, and the reform achievement was rated as Grade A. The affiliated company Jinghao Salt Chemical Company was successfully selected as the "Double Hundred Actions" enterprise of state-owned enterprise reform of the State Council SASAC. The second is to carry out in-depth benchmarking to create value. Implement the target requirements of "one profit and five rates", continue to benchmark and create targets, strengthen the guidance of business indicators, realize the simultaneous improvement of benefits and income, and further strengthen employees’ sense of acquisition and happiness. The intensity of R&D investment and the efficiency of scientific and technological output have been continuously improved, the overall asset-liability ratio has been low, and assets are safe and of good quality. The third is to strengthen basic management and consolidate the compliance management system. Give full play to the supervision forces such as discipline inspection, auditing and legal affairs, standardize the whole process system such as external information disclosure and internal report on major issues, and establish a "firewall" for compliance operation of listed companies. During the reporting period, it was awarded the honors of "Jiangxi Social Responsibility Enterprise", "Jiangxi Leading Enterprise of the Year", "Excellent Practice Case of Rural Revitalization Project of National Listed Companies" and "Excellent Case of Corporate Governance".
Ii. the industry in which the company is located during the reporting period.
1. Salt industry
According to the classification of uses, salt products can be divided into salt and industrial salt. Salt is a necessity for residents’ daily life, with relatively stable production and sales volume and weak demand periodicity. On the whole, the existing domestic salt production capacity is greater than the consumption demand, and there is a certain degree of oversupply. At the same time, due to the promotion of salt reduction movement and the overall stability of population size, the total domestic salt consumption is stable at around 10 million tons, and there is a slow downward trend. Since the salt reform abolished the regional restrictions and price restrictions on salt production and marketing, all provincial salt wholesale enterprises have carried out cross-regional business, and the differentiated competition in the industry has become increasingly fierce. From the point of view of product price, with the intensification of competition among major salt enterprises, the wholesale price of salt has declined, but the price of salt at Shangchao terminal has remained basically stable, and profits have gradually shifted from wholesale enterprises to retail enterprises. Therefore, enterprises with integrated production and marketing and strong channel control ability have stronger ability to cope with challenges. As a bulk raw material, the production and sales of industrial salt mainly depend on the downstream operation of the two alkali industries, with high price sensitivity and obvious periodicity. At the same time, as a basic raw material for industry, industrial salt has a high degree of homogeneity. With the improvement of energy conservation and environmental protection requirements, the technology, process and equipment are constantly upgraded, forming a salt enterprise with scale effect and cost advantage, and its competitive advantage is becoming more and more obvious.
2. Soda industry
Soda soda is a basic chemical raw material, which is widely used in glass, chemical industry, light industry, paper making, textile and other industries, with strong periodicity. From the supply side, there is little difference between the quality and performance of soda ash products, and the competitiveness is mainly reflected in the production cost. In 2023, the production capacity of soda ash industry will be greatly improved, and the proportion of natural soda will gradually increase, and the market competition will be intensified. With the strengthening of environmental protection, energy conservation and emission reduction, some inefficient production capacity will gradually withdraw from the market in the future, and enterprises with resource advantages, cost advantages, technological advantages, capital advantages, management advantages and circular economy model of the whole industry chain will be in a favorable position in the future competition. From the demand side, the glass industry is the most important downstream industry of soda ash. Under the background of peak carbon dioxide emissions, carbon neutrality and national strategy, the rapid growth of newly added photovoltaic installed capacity drives the growth of photovoltaic glass demand, which further drives the demand for soda ash. In addition, with the development of new energy automobile industry and the increase of green energy supply such as wind, light and water, the demand for energy storage batteries will gradually increase. As an essential material for lithium carbonate production, soda ash is expected to contribute to the new demand.
Iii. Business of the Company during the reporting period
(1) Main business
Underground mining of rock salt; Research and development, production, processing and sales of salt products such as salt, industrial salt and sodium sulfate and salt chemical products such as soda ash and baking soda.
(2) Business model
The company has gradually built a perfect integrated business model of production and sales. The company has abundant upstream salt mine resources, and promotes the group operation mode of centralized procurement, production and sales of bulk materials.
Production: according to the mode of "unified planning and fixed production by sales", the annual production plan is made according to the stable customer demand, the expected incremental orders in the market and the inventory reserve plan.
Sales: Salt and salt chemical products are sold to domestic and foreign markets. The company’s salt (edible small package salt, salt for food processing) business adopts existing channels, self-built branches and self-built sales outlets for direct sales and wholesale. Edible salt is a necessity for residents’ daily life, and the production and sales volume are relatively stable, basically without periodicity. Industrial salt and salt chemical products are mainly sold to customer terminals through direct selling and trader mode, with the help of traders with qualified business qualifications, and the sales are all buyout. Downstream manufacturers and customers mainly include fine chemicals, glass, new energy and other industries, and the customer base is relatively stable.
R&D: Independent internal R&D is carried out through its own provincial innovation platform, namely, Jiangxi Underground Recycling Engineering Research Center of Rock Salt Resources and Jiangxi Jinghao Salt Chemical Co., Ltd. Technology Center. At the same time, it maintains long-term and stable R&D cooperation with research institutes inside and outside the province, such as East China University of Science and Technology, Wuhan Institute of Geotechnical Mechanics of Chinese Academy of Sciences, Jiangxi University of Science and Technology, etc., and jointly builds R&D platforms to carry out R&D work.
Iv. analysis of core competitiveness during the reporting period
(A) the advantages of well mineral salt resources
Jiangxi province is a province with large salt resources in China, in which the production capacity of well and mineral salt ranks in the forefront of the country, and well and mineral salt has more advantages in production continuity and supply stability. The rock salt resources in Jiangxi Province are located in Qingjiang Basin (now Zhangshu City and Xingan County). The "Qingjiang Yantian" covers an area of 133.06 square kilometers and has a total reserve of more than 11 billion tons. Salt raw materials are collected from underground deep well rocks below 1,000 meters. The average grade of sodium chloride in a single seam of Qingjiang rock salt deposit is as high as 96.23%, and the average grade of sodium chloride in most seams is between 50% and 80%, so the mining conditions are superior. All the quality indexes are higher than the national standards, and it is high-quality mineral salt. Jinghao Salt Chemical Company and Fuda Salt Chemical Company are adjacent to Qingjiang rock salt deposit. The mining rights of the three mining areas have a total of 640 million tons of their own rock salt resources, which are of excellent quality and provide a solid resource guarantee for the company’s long-term sustainable development.
(B) Green circular economy and comprehensive cost advantages
The company takes the domestic leading and international advanced underground circulating alkali-making process as the main chain, and connects the whole salt-making and salt chemical industry chain in series with the comprehensive utilization of light calcium liquid alkali slag and salt-making condensed water as the key point. Based on the absorption and introduction of underground circulation technology, new technologies such as two-phase flow circulation well injection were independently developed, and the underground circulation mode was put forward, which solved the problems of temperature reduction, transportation and well injection in the two-phase transportation of soda ash calcium liquid alkali slag. After the waste slag was injected into the well, it was used as the filler of the mined-out rock salt solution cavity, which not only strengthened the safety of the mined-out solution cavity, but also solved the treatment costs such as dam building and filter pressing, and solved the pressure of environmental protection on the ground, and effectively solved the treatment cost of soda ash liquid calcium alkali slag by ammonia-alkali method. At the same time, based on the exploitation of underground mineral salt, the company exploited low-nitrate brine (used to prepare soda ash and baking soda), nitrate brine (used to prepare salt products and mirabilite) and calcium brine (used to prepare salt products and calcium chloride products) through the combination of dilute calcium solution and underground mineral resources with different components, and completed the purification, deployment and transportation of brine through the brine deployment center. Domestic advanced technology with independent intellectual property rights is adopted to complete purification, allocation and transportation, and graded reuse of condensed water, so as to realize resource recycling in the whole process, zero discharge of production wastewater and waste liquid, low product energy consumption and high resource utilization rate. A new model of green circular economy for comprehensive utilization of resources is constructed, and a comprehensive cost competitive advantage is formed. Besides,The company has three 700t/h high-temperature and high-pressure circulating fluidized bed coal-fired boilers and two 55MW back-pressure steam turbine-generator sets in its own thermal power station, which ensures the production of steam in the company’s existing devices, realizes most self-sufficiency in electricity, and has comprehensive benefits such as energy saving and environmental protection.
(C) the advantages of integrated production and marketing
The company has absolute advantages in production qualification, resource reserve and comprehensive production cost, and is one of the first modern joint-stock enterprises in the industry to realize the integration of production and sales. The company has built two modern production bases, namely, Jinghao Salinization and Fuda Salinization, and formed two core business segments, namely, salt making and salt chemical industry, which have obvious characteristics and strong competitiveness. It has a complete procurement, production and sales system, and Jinghao Salinization and Fuda Salinization have both passed the national high-tech enterprise certification. With the further extension of the company’s industrial chain, the upstream and downstream of the industrial chain have built a stable and mutually beneficial co-production and co-marketing system with win-win cooperation, and the scale cost advantage has been further enhanced.
(D) Channel advantages
Based on Jiangxi salt market, the company has built a commercial circulation network all over the province’s urban and rural areas, realized the intensive cultivation and channel sinking of the salt market in Jiangxi Province, stabilized the carrying capacity and value of the channel, occupied a dominant position in the salt market in Jiangxi Province, and was the main supplier of salt products in southern China. At the same time, the company launched an e-commerce platform and live delivery, and opened up a variety of online sales channels. In addition, the export business has been increased year by year. The company’s products are sold to Hong Kong, Macau, Taiwan Province and other regions, as well as countries and regions such as Britain, Saudi Arabia, New Zealand, United Arab Emirates and Southeast Asia. The export volume of salt accounts for more than 30% of the total national export volume, ranking the leading position in the country.
(E) Market location advantages
Yichun City and Xinyu City, Jiangxi Province are important lithium battery material production bases and photovoltaic industry gathering places in China, which are important sales markets for the company’s soda ash products and close to downstream industry gathering places, creating good conditions for the company to develop and serve high-quality customers. In addition, Guangdong, Fujian, Zhejiang and other provinces bordering Jiangxi Province are one of the largest consumption regions of chemical raw materials in China, which are close to the consumer market and have few competitors in the regional market, forming a relatively obvious market location advantage.
V. Main operations during the reporting period
In 2023, the company actively responded to the complex and ever-changing external situation. The company adhered to the goal of high-quality development, focused on key difficulties, strived for progress steadily, based on innovation, improved quality and efficiency, and promoted a substantial increase in operating performance throughout the year. The company achieved a total operating income of 2.888 billion yuan; The total profit was 590 million yuan, a year-on-year increase of 17.89%; The net profit attributable to shareholders of listed companies was 495 million yuan, a year-on-year increase of 17.47%.
VI. The Company’s Discussion and Analysis on the Company’s Future Development
(A) the industry pattern and trends
(II) Company development strategy
Adhere to the strategic main line of comprehensive recycling development and utilization of salt resources, focus on serving the national strategy, serve the overall development of the province, and serve the social and people’s livelihood security. Based on salt, strengthen and expand the strategic function of salt as "the ancestor of all kinds of flavors, the mother of chemicals, the foundation of new energy and the foundation of new materials".
Focus on the main business, consolidate and strengthen the salt chemical sector, and build a competitive barrier for comprehensive utilization of salt resources; Enlarge the salt production and circulation sector to create a second growth curve; Accelerate the integration into Shuangxin (new energy and new materials) track, develop new businesses such as salt cave energy storage (gas) and comprehensive utilization of carbon dioxide, cultivate new growth poles, and accelerate the construction of a leading salt industry group in China.
(3) Business plan
In 2024, the company will focus on the overall goal of "enhancing core competitiveness and promoting high-quality development", and take advantage of the situation and forge ahead. First, strive for strong management, promote industrial transformation and brand upgrading, and strive to create a "value river salt." Focusing on improving the comprehensive recycling value of salt resources, we will further build, extend and strengthen the chain, accelerate the project under construction to achieve stable production and promote the high-end, green and intelligent development of salt making and salt chemical industry. Promote the "horizontal integration" of the salt industry chain, release the synergistic advantages of production and marketing, consolidate and enhance the market share of salt in the province and the leading edge of overseas markets, and vigorously open up markets outside the province. The second is to take the opportunity of reform, deepening and upgrading actions, comprehensively set standards and create standards, and strive to create a "vibrant river salt". Promote the long-term modernization of corporate governance and operating mechanism. Strengthen the training of cadres and talents. Implement the company’s talent development plan and training plan, do a good job in the construction of enterprise cadres’ talent team, and help the strategy of "strengthening enterprises through talents". According to the assessment orientation of "one profit and five rates", we will improve the assessment index system of high-quality development and solidly promote the company’s "14 th Five-Year Plan" objectives. The third is to persist in scientific and technological innovation to achieve green transformation and development, and strive to create "innovative river salt". We will deepen cooperation with Industry-University-Research and continue to promote the implementation of key technology and key product innovation projects. We will promote major projects under construction and research and development, such as high-strength calcium sulfate, energy storage in salt caves, lithium extraction from brine and comprehensive utilization of carbon dioxide, and continue to promote the green transformation of enterprises. Accelerate the construction and digital transformation of science and technology innovation center, and build the company’s intelligent production, intelligent management, intelligent operation and intelligent warehousing system.Realize intelligent production and digital management. The fourth is to highlight the leadership of party building, continue to promote the integration of study and implementation with production and operation, and strive to create "diligent and honest salt". Strictly implement the "three majors and one big" decision-making system, integrate the construction of diligence and honesty into the overall development of enterprises, and give play to the effectiveness of supervision and governance. Encourage and guide managers at all levels to dare to take responsibility and do good deeds, and thoroughly practice the company’s responsibility culture. The fifth is to fulfill the mission of state-owned enterprises and strive to create a "responsible river salt". Coordinate development and safety, implement the requirements of rural revitalization and safe construction, focus on preventing and resolving various risks, do a good job in environmental protection and social responsibility disclosure, promote the development achievements of enterprises to benefit more cadres and workers, and create a good atmosphere of harmony, entrepreneurship, harmony and peace.
(4) Possible risks
1, the macro environment and the risk of product price fluctuations.
The company’s main products, such as industrial salt and soda ash, belong to bulk raw materials, and the company’s operating performance is greatly related to the macroeconomic prosperity and the development of downstream industries. Commodity prices are influenced by economic environment, supply and demand and other factors. If the future macroeconomic uncertainties lead to downward pressure on the economy, it will inhibit the sustained growth of the company’s performance. The company will strengthen the prediction of economic operation and market, optimize production technology and flow while improving the efficiency of product development and utilization, improve production efficiency, and strive to reduce production and manufacturing costs. At the same time, it will actively expand the market, increase market share, increase production and sales, and reduce business risks brought about by price fluctuations.
2. Market operation risk
With the progress of salt reform, the independent operation of salt enterprises across provinces has intensified the competition in the salt market. If the competition in the salt market continues to increase in the future and the price fluctuation of salt increases, it may have an impact on the company’s performance. The company has the strength to actively go out and seize the market across regions. The company will pay close attention to the industry development and market changes, and make timely response strategies to open up a broader space for the company’s development.
3. Safety and environmental risks
As a chemical production enterprise, the company has certain safety and environmental protection risks. However, the company attaches great importance to safety production, has established a perfect safety production management system in accordance with relevant national laws and regulations, and has continuously accumulated rich experience in preventing safety production accidents. At the same time, under the background of the national development strategy of "peak carbon dioxide emissions, carbon neutrality", various pollution control and emission reduction measures have been implemented, new technologies and new processes have been adopted to carry out energy-saving and carbon-reducing technological transformation, and a set of environmental protection related systems have been established and effectively implemented, so as to continuously build green factories. The company’s existing production devices and investment projects with raised funds meet the requirements of national industrial policies on industrial layout, device scale and technology, energy consumption and environmental protection.