Items:
The company released 2017H1 semi-annual report, realizing operating income of 487 million yuan, + 23.29% compared with the same period last year, and net profit of 75 million yuan, + 28.07% compared with the same period last year.
Main viewpoints
1. Excellent private lubricating oil enterprises with high performance
The company focuses on the production and sales of lubricating oil and automotive maintenance products, positioning in the middle and high end. Its two major brands Compton Lubricants and Lu Bang auto maintenance products have a history of more than 20 years, with more than 600 first-class dealers, full production and sales, and have made good profits over the years. The company's 2017H1 realized operating income of 487 million yuan, + 23.29% year-on-year, total profit of 100 million yuan, 45.45% year-on-year, and net profit of 75 million yuan, + 28.07%. Among them, 28100 tons of automotive lubricants were sold, accounting for 89.23 percent of revenue, and 3600 tons of industrial lubricants, accounting for 7.84 percent of revenue. The gross profit margin of sales is 34.42% and the net profit margin of sales is 15.50%, which is still stable. From 2012 to 2016, the company's parent net profit CAGR reached 21.32%, and the performance remained high after the income tax rate was adjusted from 15% to 25% in 2017. 2017Q2, the social security fund, entered the top 10 shareholders of the company, with a shareholding ratio of 0.44%.
two。 With hundreds of billions of lubricating oil market, the proportion of automotive lubricating oil has increased, and the demand for medium-and high-end lubricating oil market in China has experienced a period of rapid development from 2001 to 2010. at present, it has entered the "low growth platform", hundreds of billions of market. In 2016, China has 195 million cars, which is + 19.63% compared with the same period last year, ranking second in the world. However, the number of cars per 1,000 people is much lower than that of developed countries. It is currently in the early stage of popularization, and there is much room for improvement in the future. 2017H1, car sales of 13.35 million, + 3.8% year-on-year, is expected to be + 5% for the whole year. And with the improvement of residents' living standards and environmental protection requirements, the demand for middle and high-end automotive lubricating oil will increase. Looking to the future, China's lubricating oil has entered the 2.0 era, where repetitive surplus and structural scarcity coexist, low-end products will fall into a price war, and middle and high-end products with brand effect will enjoy price dividends and carve up more than 80% of the profits in the lubricating oil market.
3. Huangdao Industrial Park opens to break capacity bottleneck
The company opened Qingdao Huangdao Industrial Park on April 28th, 2017, with an additional production capacity of 80,000 tons / year for lubricating oil, 20,000 tons / year for antifreeze and 1000 tons / year for brake fluid. It is expected to replace the original Laoshan plant in Qingdao (40,000 tons / year of lubricating oil, 20,000 tons / year of antifreeze, 100t / year of car maintenance products), double the company's lubricating oil production capacity, and apply for high-tech enterprise qualification, strive for preferential income tax rate, and expect profits to increase.
4. Investment suggestion
We estimate that the company's net profit from 2017 to 2019 will be 163 million yuan, 205 million yuan and 252 million yuan respectively, corresponding to EPS 0.82,1.03,1.26 yuan, and PE 32X, 25x, 20Xline 2017-2019 net profit CAGR will reach 30.66%, maintaining the "recommended" rating.
5. Risk Tips:
The prices of raw materials and products fluctuated sharply, and the sales of new capacity fell short of expectations.
