Aspects that are inconsistent with the forecast
Longxing Chemical achieved revenue of 1.94 billion yuan in 2012, down 5.1% from the same period last year, and net profit belonging to listed companies was 44.047 million yuan, down 64% from the same period last year. In 2012, the company achieved earnings per share of 0.09 yuan, which was lower than we expected, mainly because the price of raw material coal tar was higher than expected. The company will not pay dividends in 2012. Main points: (1) the company sold 330000 tons of carbon black in 2012, an increase of 12.2% over the same period last year. However, due to the fall in the price of carbon black, the company's revenue fell 5.1% from a year earlier. (2) the price of carbon black began to weaken in the second half of 2012, while the price of coal tar rose steadily, resulting in a decrease in gross profit margin. The company's annual gross profit margin was 16.1%, down 3.02 percentage points from the same period last year. The price of carbon black is still weak in the first quarter of 2013, the price difference between carbon black and coal coke is still low, and the timing of the reversal is still unclear. (3) Jiaozuo Longxing's new production capacity of 70, 000 tons of carbon black was put into production in July 2012. at present, the company's total production capacity of carbon black has reached 380000 tons. The construction of the company's 35000 ton silica project is nearing completion and is expected to be put into production in 2013. (4) the company announced that it will acquire the minority shareholders of Jiaozuo Longxing and invest in the construction of 2000 tons / year polyvinylidene fluoride project. The company's short-term capital expenditure is still large, there is a certain degree of financial pressure. (5) in order to alleviate the financial pressure and optimize the debt structure, the company announced that it will issue no more than 500 million yuan of corporate bonds and no more than 400 million yuan of short-term financing bonds.
Investment impact
We slightly raised the price forecast for coal tar and therefore lowered the company's earnings per share forecast for 2013-15 by 4.6% to RMB 0.22 per cent. We maintain the 12-month target price of 3.90 yuan based on the PBvs.ROE method and maintain the sell rating of Longxing Chemical.
Main risks: product prices rise faster than expected; coal tar prices fall faster than expected.
