Event: the company released its three-quarter report on October 22nd, with revenue of 6.25 billion yuan in the first three quarters, an increase of 768.2% over the same period last year, and a net profit of 146 million yuan, an increase of 100.2% EPS0.05 over the same period last year.
The year-on-year increase in performance is mainly due to the increase in the number of items in the consolidated plastic rice information profit statement over the past 17 years.
At the same time, the company expects to return to its mother with a net profit of 205 million yuan in 17 years, compared with-18.5% and 1.87% of the same period last year.
Innovative process, VE project has raw materials and cost advantages: the company adopts a new synthesis route to produce trimethylhydroquinone, the key intermediate of VE, using p-xylene as raw material. Break the boundary that the domestic m-cresol and trimethylhydroquinone are fully controlled by the former two oligarchs and the supply is scarce; moreover, the raw material xylene of the new process is abundant and cheap, which makes the company have a greater cost advantage. Nengte Technology, a subsidiary of the company, currently has a VE oil production capacity of 20, 000 tons (corresponding to 40, 000 tons of VE powder), accounting for about 17% of the global production capacity. At present, the price of VE has bottomed out and rebounded. As of October 20, 17, the price of VE powder was about 47.5 yuan / kg, up 21.8% from the low of 39 yuan / kg.
With the advantages of sufficient raw materials and cost of the new technology, the company has a strong competitiveness; in the future, with the improvement of the VE industry, the company's performance is more flexible. According to the company's production capacity of 40,000 tons of VE powder and 15% income tax of Nengte Technology, a wholly-owned subsidiary, every 10 yuan / kg increase in the price of VE powder will bring an annual profit elasticity of about 290 million yuan for the company.
Layout vertical e-commerce, consolidate sales network: subsidiary plastic rice information is a bulk chemical commodities trading e-commerce and supply chain management service platform based on plastic raw materials, by providing a full range of e-commerce services for customers on the transaction chain, such as online procurement, finance; offline warehousing logistics, etc., has developed into one of the most influential supply chain e-commerce platforms in China's plastics industry. The huge sales network of plastic rice information is expected to solve the deficiency of the company's sales link and form a synergy effect in the business. At the same time, the rich profits of plastic rice information provide a new profit growth point for the company. The performance commitment of plastic rice city in 1719 is 15,225 and 300 million yuan.
Investment suggestion: we expect the company's EPS for 17-19 years to be 0.08,0.13,0.18 yuan respectively, and to maintain the investment rating of holding-A, with a 12-month target price of 4.9yuan.
Risk tips: VE downstream demand slowdown, plastic rice city performance is not as expected, and so on.