Main points of investment
2016 results are in line with expectations: the company released its 2016 annual report, with operating income of 2.053 billion yuan, down 10.55% from the same period last year, and net profit of 79.794 million yuan, up 32.71% from the same period last year. The weighted average ROE9.68%, increased by 2.23 percent year-on-year. At the same time, the company released a forecast for the first quarter of 2017, showing a net profit of 1473-19.64 million yuan, an increase of 50-19.64 million yuan over the same period last year.
Fine chemical subdivision product leader: the company is mainly engaged in the research and development and sales of fine chemical products, the main products are acetate, anhydride, plasticizer, polyol and insulation materials and other environmental protection, energy-saving chemical products. The downstream products include aerospace, medicine, electrical appliances, and other industries. The company is the undertaking unit of "Jiangsu Organic solvent Engineering and Technology Research Center". It has made many achievements in the research and development of organic solvent fine chemical products, and applied for and obtained a number of national invention patents.
The supply and demand pattern of trihydroxypropane has improved, the price has risen rapidly, and the industry has a high operating rate: the company has a production capacity of 20,000 tons of trihydroxypropane and is the domestic leader. Since 2012, production capacity has nearly doubled, and the growth rate on the demand side is much less than that on the supply side. Affected by the imbalance between supply and demand, product prices have dropped from 16750 yuan / ton in 2011 to the lowest point of 7850 yuan. Per ton. In 2015, the production capacity of the industry declined slightly, the demand side continued to grow, and the supply and demand was basically balanced. The operating rate of the industry will quickly rise to 77%, the industry has significantly improved, and prices have soared by 15000 yuan / ton in the context of soaring prices of raw materials, nearly doubling.
Trimellitic anhydride maintains high gross profit: the production technology of trimellitic anhydride is very high, and only a few enterprises in the world can steadily produce trimellitic anhydride on a large scale, so the product has a high technical threshold and strong anti-competition ability. The company has 10,000 tons of trimellitic anhydride production capacity before listing, and the 20,000 tons of trimellitic anhydride production capacity raised for construction was successfully put into production in September 2012. In 2013, the company started the relocation of Jiangyin plant and expanded its production capacity. By the end of December 2016, the company has formed a production capacity of 40,000 tons of trimellitic anhydride. This product is the main source of the company's gross profit, which has been maintained at a high level in the past three years.
Fixed increase code main business: the company intends to raise no more than 429 million yuan for methyl acetate, double trimethylolpropane and other four projects, the construction of the fixed increase project will consolidate the company's dominant position and ensure the company's performance growth.
Enter the field of new energy, chemical + new energy two-wheel drive: in June 2016, the company increased investment in sea-based new energy, mainly engaged in lithium battery and battery pack technology development, manufacturing and sales. The company's involvement in the lithium battery industry is a positive attempt and exploration of the new energy industry, and will form a two-wheel drive development model for the chemical industry and the new energy industry in the future, which will help to form a new profit growth point for the company. We estimate that the EPS of the company in 17-19 will be 0.2max 0.24max 0.29 yuan respectively, with an overweight rating and a target price of 18 yuan.
Risk reminder event: product prices drop, industry competition intensifies