Event

The company announces interim results

In the first half of the year, the company achieved operating income of 642 million yuan, an increase of 19.02% over the same period last year, and a net profit of 39.123 million yuan, an increase of 36.53% over the same period last year.

Brief comment

The output of barium carbonate and strontium carbonate is leading at home and abroad, and the contribution to performance has increased steadily. The company's inorganic salt business to barium carbonate, strontium carbonate, barium sulfate as the main products, mainly used in ceramics, glass, magnetic materials and other products production. In 2016, the company's output of barium carbonate products exceeded 270000 tons, ranking first in the world; strontium carbonate output of 20, 000 tons, also ranked first in Asia. In the first half of 2017, due to the suspension of production and maintenance and other reasons, the company's barium carbonate production decreased by 11% to 124300 tons, but the company seized the opportunity of reduced supply in the same industry to increase sales, and sales increased by 10% to 139000 tons. At the same time, the price of barium carbonate products rose 21% year-on-year and 11% month-on-month. In the future, with the tightening of environmental protection inspection and the steady rebound of downstream demand, the profit contribution of the company's barium carbonate and other inorganic salt products will increase steadily.

The business of high-purity manganese sulfate is strong, and the leader is looming. High purity manganese sulfate is mainly used as ternary cathode material for lithium battery. The company's high-purity manganese sulfate business is produced by its subsidiary Dalong Manganese Industry, with an annual production capacity of 10,000 tons. Driven by the manganese salt technical transformation project, the product quality and output have been greatly improved and entered a stage of stable profits. In 2016, the output of manganese sulfate in high-speed line was 10200 tons, an increase of 75.4 percent over the same period last year, accounting for 15.07 percent of the world's output of high-purity manganese sulfate. In the first half of 2017, the company further increased its production of high-purity manganese sulfate to 6469 tons, an increase of 26.89 percent over the same period last year, and sales of 6525 tons, an increase of 45.56 percent over the same period last year. In 2017, the company plans to produce 19400 tons of high purity manganese sulfate. In terms of price, the price of high-purity manganese sulfate was 5465 yuan / ton in the second quarter, up 11% from the same period last year.

Electrolytic manganese dioxide is also mainly used in the production of manganese primary batteries and lithium manganate. In the first half of the year, the sales and prices of electrolytic manganese dioxide increased slightly.

With the rapid development of the new energy vehicle industry, especially the trend that the ternary cathode has gradually become the mainstream, the company's manganese salt business may also face the opportunity of rising volume and price.

Profit forecast and rating

We estimate that the company's EPS in 2017 and 2018 will be 0.31 yuan and 0.38 yuan respectively.

We believe that thanks to stricter environmental protection and supply-side constraints, the inorganic salt business has increased steadily.

We are more optimistic about the trend that the company will benefit from the accelerated development of the new energy automobile industry in manganese salt and give the company an "overweight" rating.

Risk tips: inorganic salt, manganese salt production is not as expected, product prices decline, and so on.