Core viewpoints
The company is one of the highly competitive viscose short production enterprises in China, with a viscose production capacity of about 300000 tons (120000 tons in Xinjiang Manas + 170000 tons in Funing, Jiangsu Province, and about 226000 tons in rights and interests). It has certain advantages in capacity scale, production cost, profitability and so on. The company's average sales price of viscose staple fiber in 2016 is 12479 yuan / ton, and the gross profit margin is 13%. We predict that the average viscose price will reach 15100 yuan / ton in 2017. the superimposed operating rate will remain high, and the increase in volume and price is expected to push the company's viscose gross profit margin to 17.8%. In addition, the company announced in March that it will invest in a new 160,000 tons / year differential viscose project. After completion, the total production capacity will be increased to 460000 tons (equity capacity is about 380000 tons), and the market influence of the industry will also be further enhanced.
Viscose staple fiber industry will maintain a high boom, the company is expected to fully benefit. (1) the supply and demand of viscose staple fiber is tight, the high operating rate of the industry promotes the price rise and the price difference widens, and the company has a certain cost advantage; (2) on the supply side: the new production capacity is limited before the second half of 2018, at the same time, the target price of cotton in China is changed to "fixed every three years". Superimposed cotton inventory removal, cotton price will support the cost and price of viscose staple fiber. (3) demand side: downstream spindles continue to put in new capacity, while the import of spinning processors increases significantly after the second half of 2016, and the downstream demand for viscose fiber will remain strong in the future.
The medical and health integration strategy has achieved initial results, and the performance has exceeded the promise. The company's acquisition of Australia and foreign health investment covers medical services, rehabilitation chain, health management, pharmaceutical logistics in one, has been formed on the basis of medical services, pharmaceutical circulation as an extension, committed to the industrial layout of providing diversified and high-quality medical and health services. Among them, the medical and health sector achieved operating income of 1.657 billion yuan and contributed profit of 88.31 million yuan in 2016, far exceeding the performance commitment of 60 million yuan. At present, the company's dual-main business model is beginning to achieve results, and the future medical and health sector is also expected to smooth the impact of periodic fluctuations in the viscose industry.
Financial forecasts and investment suggestions
We forecast that the company's earnings per share will be 0.58,0.79,0.68 yuan respectively from 2017 to 2019, and use the segment valuation method to value the company's viscose staple fiber plate and medical and health plate respectively, of which viscose staple fiber EPS is estimated to be 0.47 yuan in 2017, corresponding to 19 times the estimated value of the stock price of 8.93 yuan; Healthcare Health expects the EPS to be 0.11 yuan in 2017, giving 41 times the estimated value corresponding to the stock price of 4.51 yuan. Together, the company has a target price of 13.4 yuan, giving a buy rating for the first time.
Risk hint
The production capacity of viscose staple fiber is put into production too quickly, which leads to a sharp drop in price; the development of medical and health business is not as expected.