Company profile
Compton is a professional manufacturer and service provider of lubricating oil and car maintenance products. Its COPTON brand lubricant and Roab brand car care products marketing network covers 31 provinces, municipalities and autonomous regions, and has more than 600 first-class dealers.
In the first half of 2017, the company achieved operating income of 487 million yuan, an increase of 23.29% over the same period last year, while the net profit of shareholders belonging to the parent company was 75.476 million yuan, an increase of 28.07% over the same period last year.
Company comment
The lubricating oil industry is large and scattered, and high-quality products continue to benefit.
The development of lubricating oil industry is greatly affected by macro-economy, especially transportation, machinery and equipment, etc. Since 2008, the rapid development of emerging economies represented by China has led to the rapid growth of global demand for lubricating oil. the global demand for lubricating oil increased from 32.2 million tons in 2009 to 37.85 million tons in 2015. At present, China has become the largest consumer and producer of lubricating oil in the world. According to Freedonia Group data, the demand for lubricating oil in China will increase to 12.75 million tons in 2022, while the total domestic output of lubricating oil in 2016 is only 6.87 million tons. At present, there are a large number of domestic lubricating oil enterprises, and the high-end market is basically dominated by international brands such as Mobil and Shell. Petrochina Company Limited, Great Wall and Kunlun of Sinopec also occupy a large number of middle and low-end markets by making use of the cost advantage of upstream refining and chemical base oil. the rest of a large number of private domestic brands fully compete in the middle and low-end market, and the industry concentration is low. In the future, the development trend of the lubricating oil industry will develop in the direction of high-end, energy saving and environmental protection, and large industry leaders and differentiation leaders will continue to benefit.
Offline channel + product quality two-pronged approach
Compton adopts the mode of fixed production by sales, adopts regional dealer distribution system for sales, has more than 600 major dealers, and has established a long-term and stable cooperative relationship. The company's leading products are medium-and high-grade products, and take the lead in launching the highest-grade products in the same period, such as SJ, SL, SM, SN gasoline engine oil and CI-4, CJ-4 diesel engine oil. And presided over the formulation of three automotive maintenance supplies industry standards, participated in the drafting of seven national standards.
New production capacity breaks through bottleneck
The production capacity utilization rate of the company exceeded 130% in 2016. in the first half of the year, the company raised investment project Huangdao new factory to meet the equipment commissioning conditions, and the production capacity will be gradually released in the second half of the year. after reaching production, the project can produce 80,000 tons of lubricating oil, 20,000 tons of antifreeze and 1000 tons of brake fluid. the company is in the domestic leading level in terms of production scale, product technology, operational efficiency and other hardware, laying a solid foundation for follow-up development. In addition, the Huangdao R & D Center will also be put into use in the second half of the year, and the company's R & D, testing and quality control capabilities will also be further improved.
Profit forecast and valuation
We forecast that the operating income of the company in 2017, 2018 and 2019 is 1.037 billion yuan, 1.26 billion yuan and 1.519 billion yuan respectively, with a growth rate of 26.33%, 21.54% and 20.50% respectively, and the net profit of shareholders belonging to the parent company is 153 million yuan, 200 million yuan and 239 million yuan respectively. the growth rates were 35.23%, 30.70% and 19.29%, respectively. Fully diluted EPS per share is 0.77, 1.00 and 1.19 yuan respectively, corresponding to 31.1,23.8 and 20.0 times PE, with a new "overweight" rating in the next six months.
Risk hint
Raw material prices fluctuated sharply; the release of new capacity was lower than expected.