Tuesday 20 November 2018

4 things i learned from Dongyue Organosilicone Prospectus

On 16 November 2018, Dongyue Organosilicone Prospectus was lodged on the China Securities Regulatory Commission. The Prospectus (331 Pages in Chinese) can be found here

Will just quickly note down 4 things i noticed from the prospectus

1. Company's major source of revenue in the Organosilicone sector is the 107胶

As such any major change in margins of 107胶 would likely affect the company's profitability as a whole.

2. Organicsilicone cost is around 15 000 yuan

Using this as a gauge, the margins of the business can be gauged. Although Organosilicone has fallen to the 20 000 yuan level in October and November, the business should still be profitable

3. Dongyue Organosilicone is 8th in the world in terms of production volumes as of 2017

The market leader in the world would be Dow Chemical Company 

In its prospectus it aims to establish itself as a top 5 producer via the use of proceeds to expand volume. Expanding capacity from 118 thousand tons to 282 thousand tons

4. Uses of Organosillicone

Construction is the component that uses the most.
Coming in 2nd would be Electrical appliances
3rd would be energy uses. Example would be cables as well as Solar battery production. According to the prospectus, the lightweight and durability are few reasons why organosillicone is being used.

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