Matters

The company released the 2015 mid-term report, with operating income of 548 million yuan in the reporting period, an increase of 30.73% over the same period last year, and a net profit of 11.9464 million yuan belonging to shareholders of listed companies, with an EPS of 0.015 yuan.

Main viewpoints

1. The operation of ethylene glycol plant is stable, and the cost per ton is decreasing continuously.

During the reporting period, Tongliao Gold Coal produced a total of 72100 tons of ethylene glycol and 29100 tons of oxalic acid. Since the second half of 14 years, due to the continuous improvement and maturity of technology and technology, the plant load has increased significantly, basically maintained at more than 90%. The increase of plant load can effectively reduce the depreciation cost per ton. At present, the cost of producing ethylene glycol from coal is about 4000 yuan / ton. In the future, as the company carries out the technical transformation of the existing equipment, the cost per ton is expected to continue to decline. In addition, during the reporting period, the associated company Yongjin Chemical continued to promote the construction of five ethylene glycol project subsidiaries (with a total production capacity of 1 million tons / year). Anyang and Puyang units produced a total of about 60,000 tons of ethylene glycol in the first half of the year, while Xinxiang, Yongcheng and Luoyang units are expected to be put into operation in the second half of the year.

two。 The fall in international crude oil prices has affected the company's profits.

Affected by the slowdown in global economic growth, international oil prices have fallen again recently, with WTI crude oil spot falling below $40 / barrel and ethylene prices in Northeast Asia falling to $919 / ton. The cost of ethylene glycol from ethylene has dropped, which is estimated to be about 4300 yuan / ton. If the oil price remains low or even downward, the company will not have a cost advantage in producing ethylene glycol from coal. The price of ethylene glycol in eastern China has fallen to 5630 yuan per ton, down nearly 25 per cent from this year's high. The company's profitability will be tested again.

3. The fixed increase project will expand equity production capacity.

During the reporting period, the company plans to increase it, which will be used for Tongliao gold coal capacity expansion and technical transformation, purchase of Tongliao gold coal equity and so on. If the additional issuance is successful, the company's ethylene glycol production capacity will rise from 378000 tons / year to 547000 tons / year, further consolidating its leading position in the industry. Profit forecast and rating we expect the company's 15-16 EPS to be 0.04,0.07 yuan, corresponding to PE 233X, 113x. The company spent a lot of money on ethylene glycol from coal for many years, but at present, the core process has been broken through, the plant load is high, and the cost is reduced. If the oil price stabilizes and picks up in the future, coupled with the increased flexibility of the company, the performance is expected, and the rating is recommended.

Risk hint

1. Oil prices continue to decline

2. The operation of the device is unstable.