22H1 net profit fell 43.6% compared with the same period last year, maintaining the "overweight" rating. Zhejiang Longsheng released a semi-annual report on August 20. 22H1 achieved 9.08 billion yuan in revenue, yoy+7.9%; achieved 1.43 billion yuan in net profit (1.16 billion yuan after deducting non-yoy-16.2%), yoy-43.6% (deducted non-post-yoy-16.2%), exceeding our previous expectations (22H1 970 million yuan). Taking into account the weak downstream economy, we downgrade the company's 22-24 EPS forecast to 0.96max 0.97max 1.07 yuan (the previous value is 1.07Universe 1.15max 1.42 yuan), combined with the comparable company valuation level (22-year Wind consensus expectation average 16 times PE), considering the limited sustainability of the company's real estate business, we give the company 22-year 13XPE, corresponding to the target price of 12.48 yuan (the previous value is 13.91 yuan, based on 22-year 13XPE). Maintain the "overweight" rating.
The demand for dyestuff downstream is weak, and the deduction profit is lower than the same period last year.
During the reporting period, the downstream terminal demand of the company's main business dyes and related intermediates decreased, and the industry was not booming. The company's 22H1 realized a net profit of 1.16 billion, down 16.2% from the same period last year. In terms of segment, the income of dye / auxiliaries / intermediates business 22H1 realized RMB 48.6 million respectively, with a year-on-year change of 3.4%, 8.3%, 9.6%, 12.4%, 3.3, 000, 000 and 7.5%, respectively. Due to changes in product structure and rising cost pressure, the company's 22H1 sales gross profit margin was 31.0%, down 7.5pct from the same period last year; in addition, the company's sales / management (including R & D) / financial expense rates were 3.7%, 8.5% and 0.8%, respectively, and the expense rate fell 4.7pct to 13.0% year-on-year. The company achieved non-recurrent profit and loss of 270 million yuan in the first half of the year, down 870 million yuan from the same period last year.
Intermediates and dye projects have been launched one after another to enhance the global leading power of dye business. According to the company's semi-annual report, dye and intermediate business is still the main source of profits of the company. When the competition in the industry begins to intensify, the first-mover advantage has become the cornerstone of profit, and the integration of the industrial chain continues to stabilize the company's leading position in the industry. Dye business vigorously carry out digital and intelligent upgrading and transformation, and implement "low operation", "low detection", "low emission", "low hidden danger" and "low coordination" in the workshop.
The digital mode of production actively promotes the development of dyes in the direction of full ecology. The company has a large number of projects under construction, including an annual output of 20,000 tons of H acid, an annual output of 90,000 tons of disperse dye filter cake and 60,000 tons of liquid dyes, and an annual output of 37000 tons of resorcinol. It is expected that the company will further enhance the global dominance of its dye business after it is put into production.
Risk tips: downstream demand is lower than expected; real estate business cash flow risk; cost volatility risk.