Events:
Lubei Chemical released its semi-annual report for 2017. during the reporting period, the company achieved revenue of 263 million yuan, an increase of 4.75 percent over the same period last year, and a net profit of 26.8671 million yuan belonging to shareholders of listed companies, an increase of 14.0033 million yuan over the same period last year, or 108.86 percent over the same period last year.
Main points of investment:
The overall business trend is improving, and the growth rate of some high-quality products is obvious. In the first half of the year, the situation of the company's cement, bromine, raw salt and other industries was optimistic, and the market prices of some products warmed up. Of this total, the sales revenue of cement products increased by 59.76%, that of bromine products by 45.35%, that of raw salt products by 16.48%, and that of other products such as sulfuric acid and woven bags by 22.90%. Under the influence of factors such as underemployment and reduction of stock in the previous industry, the situation of the chemical fertilizer market has improved, and the market price is basically stable and increased. During the reporting period, the company implemented fine management and deep technical transformation of the system to reduce the cost of unit consumption, resulting in a significant increase in the overall performance of the company.
Strengthen technical upgrading and cost control, and continue to improve various financial indicators. In recent years, the company has continuously increased the efforts of plant transformation, independent innovation and technology development, developed the gypsum sulphuric acid co-production cement technology with independent intellectual property rights and successfully industrialized; at the same time, it continues to optimize process indicators, increase output and reduce power consumption, so as to effectively reduce product production costs and achieve effective cost control. With the continuous promotion of environmental supervision and inspection, a number of patented technologies of the company not only avoid the secondary pollution of waste acid, but also reduce the treatment cost of waste acid, and achieve a win-win situation. During the reporting period, the company obtained a hazardous waste operation license to deal with 120000 tons of waste sulfuric acid per year, resulting in certain economic and social benefits.
The management and control of the three fees is reasonable, and the sales expenses and management expenses brought about by fine management have decreased by 8.62% and 4.61% respectively compared with the same period last year. During the reporting period, operating cash flow increased by 25.33% compared with the same period last year; total liabilities totaled 267 million yuan, down 34.74% from the beginning of the year; and the asset-liability ratio was 19.39%, down 8.02% from the beginning of the year.
The industrial fund is progressing smoothly, and cooperation in new materials and new energy continues to advance. The company cooperates with Jinjiang Group, Hengjie Industry and Hangzhou Golden Investment to launch a new material and new energy industry fund. At present, various investors have signed the "Industrial Fund Cooperation Agreement" and have been examined and approved by the company's board of directors and shareholders' meeting. The fund, with a total amount of 1.001 billion yuan, is mainly invested in the field of new materials and new energy. Including but not limited to lithium-ion battery materials projects, coal tar hydrogenation projects, electronic special gas projects. The relevant follow-up work is being carried out in an orderly manner, and the establishment and later operation of the industrial fund will further accelerate the pace of the company's integration of industry and finance, laying the foundation for the company's follow-up development in the field of new materials and new energy.
Profit forecast and investment rating: maintaining the buy rating does not take into account the contribution of the company's new business development and state-owned enterprise reform. The company's EPS from 2017 to 2019 is expected to be 0.13,0.15,0.18 yuan respectively. We are optimistic that the market demand for the company's major products will continue to improve, and the sales price will rise steadily; at the same time, after the introduction of Lubei Group to invest in Jinjiang Group, the cooperation between the company and Jinjiang Group in lithium electricity and other new materials is expected to gradually fall to the ground. Maintain a "buy" rating.
Risk hint: the recovery of downstream products is not as expected; the progress of the project is not as expected.