Dinglong Reports Strong Growth in Color Toner Sales

Hubei Dinglong Chemical Co., Ltd. released its earnings preannouncement for the first half of this year. The net profit of the listed company is RMB 30.92 to 34.63 million (about USD $5 to 5.61 million), up by 25% to 40% year-on-year, compared to 2012.

Channel building for color toner has paid off. The firm anticipates that  color toner sales in the first half of 2013 will reach beyond 100 metric tons (220,000 pounds) and will rise rapidly in the second half.

The market may see the prospect of color toner lower than expected, but Dinglong thinks the market fails to see the difficulty in substituting color for monochrome toner and therefore overestimated the advancing speed of new products.

Toner cartridge remanufacturers have high requirements for the quality and consistency of color toner. They need more time to test and evaluate these new products. Plus, as domestic toner cartridge manufacturers tend to export their products, the downstream feedback cycle is extended. Thus, it takes a longer time to replace the original monochrome toners. On the other hand, downstream customers are highly attached to toner suppliers, so early infiltration and channel building will be a slower process. Once completed, however, the demand for color toner should accelerate sharply.

Research shows that downstream customers post high satisfaction with Dinglong’s color toner. With the completion of channel building and the purchase of downstream toner cartridge remanufacturer Mito Color Imaging Co., Ltd. (the largest color toner cartridge manufacturer and color toner consumer in China),

Dinglong’s color toner business is expected to accelerate and the earnings should rise in the remaining months of 2013. The net profit for 1Q2013 were RMB1.96 million (about USD317 thousand). This should increase more than 37.6% compared with those of 4Q2012, which were 3.14 million (about USD508 thousand). Dinglong anticipates the net profits for 2013 Q2 will be more substantial.

Dinglong is forecasting net profits for the parent company for the three years from 2013 to 2015 will be RMB 130 million (USD $21 million), 170 million (USD $27.5 million) and 247 million (USD $39.9 million), with growth rates of 92%, 40% and 45%, respectively.