[main points of investment
The company ranks among the top three in China's oxalic acid industry and has a strong technical and management team. The management of the company has been deeply ploughing the oxalic acid industry for many years, and through continuous accumulation and research and development, the company has formed a production capacity of 95000 tons / year of industrial oxalic acid and refined oxalic acid, and the production capacity, output and market share are among the top three in the industry. In 2014, China's oxalic acid production capacity is about 400000 tons, the output is about 340000 tons, and the company's market share is about 20%. The company has strong market pricing power and a wide range of customers, which lays a foundation for the further expansion of the business scale.
The company has electronic-grade oxalic acid production capacity and benefits from the global trend of electronic chemicals outbreak. The company has been involved in the research and development of refined oxalic acid since 2003, supplying electronic refined oxalic acid for several years, and downstream sales customers include international leading companies such as Die Li Co., Ltd., Japan. Electronic grade oxalic acid can be used to prepare barium titanate by oxalate coprecipitation. It takes about 0.2-0.4 tons of oxalate made from refined oxalic acid to produce 1 ton of electronic ceramic materials. The industry is expected to benefit from the global outbreak of electronic chemicals.
By investing in lithium iron phosphate, the company is expected to cut into the vast energy storage industry. The company announced on November 19 that Fengyuan LiNeng, a subsidiary, plans to implement the lithium iron phosphate construction project with an annual output of 10000 tons of lithium battery cathode material, with a total investment of about 420 million yuan, which will be completed in two phases within two years, and is expected to achieve an average annual sales income of 1.025 billion yuan. The total annual profit is about 220 million yuan. The investment in lithium iron phosphate project shows the company's strategic ambition to open up the industry chain of oxalic acid-ferrous oxalate-lithium iron phosphate and set foot in the energy storage industry. The company has set up an investment and M & A department, and we think there is a broad space for the extension of the company.
Profit forecast and valuation: from 2016 to 2018, the company is expected to achieve operating income of 2.86,4.43 and 947 million yuan, net profit of 0.27,0.38 and 106 million yuan, and EPS0.27 of 0.40,1.09 yuan. Considering that the company has the production capacity of electronic grade oxalic acid and other new materials, as well as the attribute of secondary new shares, it is given a "overweight" rating of 15.5-16.5 times PS in 2017, corresponding to the target price of 70.8-75.4 yuan per share.
Risk hints: the risk of price fluctuations in the oxalic acid market; the risk of blocking expansion to the downstream sector, and the risk of valuation adjustment of the secondary new stock sector.