Summary of the report:
In 2016, the company achieved revenue of 275 million yuan, an increase of 22.08% over the same period last year; net profit of 64.6512 million yuan, an increase of 16.94% over the same period last year; and booming production and sales of the company's products, achieving steady growth in performance. The company achieved revenue of 62.5916 million yuan in the first quarter of 2017, an increase of 22.34% over the same period last year, and its net profit was about 12.695 million yuan, an increase of 1.71% over the same period last year. The profit distribution plan of the company is to distribute a cash dividend of 3.00 yuan (including tax) to all shareholders for every 10 shares, and to increase 8 shares for every 10 shares with the capital accumulation fund.
Commercial color paste leader, benefit from the growth of the industry. The company has a production capacity of 11000 tons of color paste when it is listed, and it is the largest commercial color paste manufacturer in China. As the commercial color paste can improve the utilization rate of pigments, it is gradually replacing the self-grinding color paste with low standardization and high pollution. The domestic annual use of color paste is nearly 2 million tons, the current permeability of commercial color paste is less than 20%, and there is huge room for improvement in the future. As the leader and pioneer of the color paste market, the company will benefit from the industry trend of color paste commercialization for a long time.
Color pastes and additives go hand in hand, and the products remain highly profitable. The company has increased its investment in the additive market and carried out the trade business of additives. The revenue of additives has reached 29.2895 million yuan, with a large increase. In terms of color paste, while opening up the market, the company's gross profit margin increased slightly over the previous year, and the gross profit margin of paint, latex and fiber color paste reached 52.32%, 40.36% and 43.82% respectively.
The progress of production expansion is in line with expectations, and the high-end applications will be the next city. The construction work of the company's IPO project "20,000 tons of Waterborne Color paste production Line and self-use Additives" is progressing steadily. During the reporting period, the subsidiary Changshu Shiming successfully realized the project construction of 10375 tons of waterborne colorants and 2680 tons of additives, and entered the stage of trial production. In addition, the company's fiber raw solution coloring project has made a major breakthrough, has completed the viscose and acrylic raw liquid coloring paste research and development, and built a 5000 tons / year raw liquid coloring nano-pigment dispersion production line, large-scale production is just around the corner, the market demand for commercial colorant is expected to show explosive growth.
Profit Forecast: the company is expected to achieve a net profit of 0.84 billion yuan in 2017-2019, corresponding to the PE 66-53-46 times, given the "overweight" rating.
Risk hint: the risk of falling color paste price.