Main points of investment:
Company announcement: in the first three quarters of 2021, the company achieved operating income of 1.823 billion yuan (YoY + 28.35%), net profit of 222 million yuan (YoY + 25.17%) and non-return net profit of 211 million yuan (YoY + 31.69%). The performance is in line with expectations. Among them, Q3 realized operating income of 586 million yuan (YoY + 13.66% QoQ-8.58%), net profit of 64 million yuan (YoY- 12.70% QoQ-21.95%), and non-return net profit of 61 million yuan (YoY-5.75%,QoQ-22.78%).
Affected by the traditional off-season, the downstream demand of Q3 organic pigments is insufficient. In 2021, the prices of the company's main Q3 products, permanent solid yellow, Lisol red, permanent solid red, color starch red and quinacridone, declined weakly, with month-on-month changes of-10%,-1.8%,-3.2%,-7.9% and + 1.3%, respectively, and output growth rates of-22.7%,-6.2%,-29.4%,-8.9% and 4.3%, respectively. The month-on-month changes in sales were + 0.9%,-6.5%,-19.1%, + 14.1% and-5.8% respectively. Due to the impact of rising shipping costs in July-August, overseas holidays were superimposed, and the overall pigment demand was not supported enough, resulting in a narrow decline in the prices of some organic pigment products.
At the same time, the cost of raw materials also increased significantly during the reporting period. The year-on-year changes of main raw materials 2pyrinic acid, 3pyrrolidine 3 dichlorobenzidine, ethyl naphthol, 4B acid and p-chlorobenzonitrile were-4.41%, + 57.92%, + 15.76%,-5.22% and + 3.43%, respectively. With the increase in freight charges, the gross profit margin of 21Q3 sales decreased by 24.55%, compared with the previous year. Due to increased R & D investment, Q3 R & D expenses increased by 5.41 million yuan month-on-month, the company's net interest rate was 12.3%, and the month-on-month decline in 1.71pct.
The pattern of the organic pigment industry continues to improve, the metal sodium project continues to promote as planned, and the company can make a profit in the future. At present, the competition pattern of the industry continues to improve. In the short term, Changzhou North American relocation project is not as expected, with the gradual pick-up of Q4 demand, the overall supply and demand of the industry is expected to be tight this year. In the long run, the domestic environmental protection policy is becoming more and more strict, and part of the backward production capacity of the organic pigment industry continues to clear. With the integration advantage of self-made raw materials, the company is expected to gain a larger market share. The company's 20,000-ton metal sodium and 30,000-ton liquid chlorine projects continued to move forward, with an additional 46 million investment in the project under construction during the reporting period, which is expected to be completed and put into production by the end of 2021, bringing new profit growth points to the company's performance.
Investment rating and valuation: maintain the profit forecast for 2021-2023, and expect to achieve a net profit of 3.35,4.55 and 554 million yuan, corresponding to the PE valuation of 14-10-8. Maintain a "buy" rating.