Wynca Chemical Survives the Crisis    

Zhejiang Wynca Chemical Group Co., Ltd. (Wynca Chemical, SH: 600596) has its headquarters in Hangzhou, Zhejiang province. Founded in 1965, this company was listed on Shanghai Stock Exchange in 2001 and has 13 subsidiary companies. It mainly engages in the production and sales of pesticides and silicon chemicals. Its main products include glyphosate and silicone. Wynca Chemical is known as the world's second largest producer of glyphosate.

Profit declines   

In the first half of 2009, Wynca Chemical had a total sales revenue of RMB2.018 billion, a year on year drop of 50.27%, and a total net profit of RMB164 million, down 85.27%. But in the second quarter of 2009, its sales revenue rose by 71% from the first quarter of 2009. The profit drop in the first half of 2009 was mainly caused by the sharply declining price of glyphosate. In the first half of 2009, the average price of glyphosate was only RMB2 4000/t, down 73% from the same period of 2008, making the company's glyphosate sales revenue drop more than 60% year on year and its gross profit margin fall from 46% down to 19%.
    Wynca Chemical has a unique "glyphosate - methyl chlorides - silicone" industrial recycling system, which recovers and purifies the byproduct methyl chloride generated in the glyphosate production for the synthesis of silicone monomer, and at the same time recovers and purifies the byproduct - hydrochloric acid generated in the production of silicone monomer, for glyphosate production, making a efficient and cyclic utilization of element chlorine.
    Currently, the price of silicone is still in the bottom. In August 2009, despite being at a lower price of RMB19 000/t, Wynca Chemical's silicone still maintained a gross profit rate of more than 25%. In the future, driven by the demand from real estate and automotive industries, the price of organic silicon is expected to rise. Wynca Chemical has well developed many high-value added organic silicon downstream products so as to enhance competitiveness.
    During 2006 - 2008, Wynca Chemical's revenue and net profit grew rapidly, with an average annual growth rate of 46.15% and 107.57%, respectively. In 2006, 2007 and 2008, the company had a gross profit rate of 28.00%, 30.72% and 40.01%, net profit margin of 13.22%, 14.51% and 24.97% and net profit of RMB337.2917 million, RMB497.4804 million and RMB1.69 billion, respectively.
    In the first quarter of 2009, due to the impact of the bad macroeconomic situation, the company's two main product businesses had a significant downturn in the fierce market competition. Wynca Chemical's total profit in Q1 2009 was lower than the same period of 2008, but it was able to run in full production with a basic profit rate due to the stable demand of its large foreign customers and long-term partners.
    Over 90% of this company's revenue comes from its glyphosate and silicone products, of which the sales revenue of glyphosate accounts for 59.03% and silicone accounts for 35.34%.

New Projects   

As a leading enterprise in the glyphosate industry, Wynca Chemical has had a complete production chain, mature and advanced technologies and recycling processes, and relatively stable sales channels. It has achieved the balanced development of pesticide formulations and active ingredients, and constantly increased the added value of its products. Recently, Wynca Chemical is constantly carrying out technological renovations and implementing new projects to expand its production capacity and improve its core competitiveness.
    Wynca Chemical recently has raised funds to build a 45 000 t/a room-temperature vulcanized silicone rubber and relative supporting engineering project. This project will annually produce 30 000 tons of silicone 107 rubber, of which 15 000 tons will be supplied to customers as raw material for the production of silicone building sealant, and the rest will be for self-use. The project has a total investment of about RMB209.3million and will be completed in December 2009. (CCR2009 No.25)
    Wynca Chemical also plans to construct the phase II project to make full use of the byproducts generated in the production of silicone monomers, including 4 000 tons of phenyl (methyl) chlorosilane, 20 000 tons of trichlorosilane, 2 000 tons of silica and 9 000 tons of coupling agent every year. Construction on the project will be implemented by Zhejiang Kaihua Synthetic Materials Co., Ltd., a subsidiary of Wynca Chemical. This project has a total investment of RMB414.29 million and is due for completion in April 2010.
    Along with the capacity expansion of pesticide technical, Wynca Chemical intends to actively develop pesticide formulations to extend its product chain. It plans to build a series of projects, including 50 000 t/a water-soluble glyphosate salts, 45 000 t/a water-soluble glyphosate salts granules, 22 000 t/a glyphosate aqueous solution, 3 000 t/a chlorpyrifos aqueous emulsions, 2000 t/a chlorpyrifos granules, 2 000 t/a chlorpyrifos emulsifiable concentrate, 200 t/a quinclorac SC, 200 t/a quinclorac plus bensulfuron-methyl WP, 600 t/a quinclorac WP, and 100 t/a pyrazosulfuron-ethyl tablets. These projects have a total investment of RMB242.8 million and will be completed in June 2010.