Main points of investment:
The main products profit improvement, soda ash, glass industry boom. The company's original main products are sodium carbonate and ammonium chloride, and then gradually transformed into pesticides, fine chemicals, new materials and other industrial fields. In the traditional business field, the company relies on its own salt, phosphate and quartz placer resources to form an annual production capacity of 1.1 million tons of sodium carbonate and ammonium chloride, and further expand into the downstream intelligent glass and special glass business fields. at present, it has a production capacity of 465,000 tons per year. From 2014 to 2016, the soda ash industry continued to eliminate production capacity, the backward production capacity was gradually phased out and shut down, and the company's profitability was improved. According to Baichuan data, the current price of soda ash is 1593 yuan / ton, about 150 yuan / ton higher than the average price in 2016. Based on the result of capacity loss and inventory removal, the price of the glass industry has increased significantly and the prosperity of the industry has increased.
Strict environmental protection has led to a rise in the price of glyphosate. The company has double glyphosate production capacity of 135,000 tons / year, currently the largest single set in China, glyphosate production capacity of 50,000 tons / year, double glyphosate glyphosate intermediates. In recent years, due to sufficient supply, the overall operating rate of the glyphosate industry is insufficient, and the price is hovering at a low level. Affected by the stricter law enforcement of national environmental protection, at the end of the 16th, there were only more than a dozen enterprises in normal production, a large number of small and medium-sized production capacity withdrew, the industry concentration increased, and the price of glyphosate rebounded sharply. According to Zhuochuang data, the current price of glyphosate is 20500 yuan / ton, about 2000 yuan / ton higher than the average price in 2016.
Holding STK to expand the field of bio-pesticides. The company owns 51% of the Israeli STK company, and in 2016, its flagship product, TIMOREX GOLD, was registered by the Ministry of Agriculture of China under the trade name "Tian Mengjin" and was launched on the Chinese market in February 2017. The newly developed two types of biological veterinary drugs for fish have been put on the South American market and are actively carrying out registration experiments around the world. Biological pesticides compared with chemical pesticides, although the current market share is small, but the growth rate is obvious. With the continuous acquisition of new product research and development and experimental registration of STK biological pesticides in Israel, the progress of market development will become the profit growth point of the company in the future.
Methionine, carbon fiber and other new projects are making steady progress. The company's main new start-up project: 50,000 tons / year methionine project is under construction and is expected to be put into production in 2018. Methionine can be used as pharmaceutical intermediates, food additives and animal feed additives. The domestic market demand mainly depends on imports and has a broad market space. 3000 tons of high-performance carbon fiber project is under construction and is expected to be put into production in 2018. It can be widely used in aerospace, automotive, new energy, sports equipment and other product fields. Domestic demand also depends on imports and has a good market prospect. The epoxy imidacloprid project was launched and various filing procedures were completed.
Profit forecast and valuation. The profitability of the company's main products has improved significantly, while actively expanding biological pesticides, methionine, new materials and other new areas, is expected to further thicken the company's performance. We estimate that the company's EPS in 17-19 years will be 0.19,0.22,0.24 yuan respectively, giving the company an industry average of 28 times PE over the past 17 years, with a target price of 5.32 yuan.
Risk tips: product prices fluctuate; projects under construction fall short of expectations.