Events:
The company released its quarterly report for 2017. during the reporting period, the operating income reached 692 million yuan, an increase of 12.21% over the same period last year. The net profit attributed to shareholders of listed companies was 96.53 million yuan, an increase of 1.94% over the same period last year, and the deduction of non-net profit belonging to shareholders of listed companies was 95.18 million yuan, an increase of 1.62% over the same period last year, realizing EPS 0.48 yuan.
Comments:
1. Operating costs rose, average product prices fell, and Q3 profits declined. The company achieved operating income of 692 million yuan in the first three quarters, an increase of 12.21% over the same period last year, but operating costs increased significantly, from 389 million in the same period last year to 464 million yuan this year, an increase of 19.46% over the same period last year, so net profit increased by only 1.94%. The increase in the company's cost is mainly due to the increase in the price of raw materials and the increase in sales expenses. especially since the third quarter, the average price of the company's main vehicle antifreeze has dropped from 15870 yuan / ton of Q2 to 15122 yuan / ton, a drop of 4.71%. The average prices of industrial lubricants, automobile maintenance products, base oils and additives of other products have decreased to varying degrees, so the net sales interest rate of Q3 has dropped to 10.24%. Led to a significant decline in Q3 profits.
2. The Huangdao project helps to improve the production capacity, and the marketing channel is highly competitive.
The company mainly deals in automotive lubricants, industrial lubricants and car maintenance products, with a capacity utilization rate of more than 130% in 2016.
At present, the new plant in Huangdao, the company's fund-raising project, has entered the stage of commissioning and production, and will gradually release its production capacity. 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, operation efficiency and other hardware, laying a solid foundation for follow-up development.
At the same time, the company's COPTON brand lubricating oil and Roab brand car care products marketing network throughout the country's 31 provinces, municipalities and autonomous regions, with more than 600 first-class dealers, has formed a more competitive marketing system.
3. With the continuous growth of the domestic automotive lubricating oil market and the high-end demand for products, the company will benefit.
With the rapid development of China's economy, the continuous acceleration of industrialization and the sustained growth of car ownership, China has become the world's largest consumer and producer of lubricating oil, and is one of the few countries in the world to maintain sustained growth. According to the "World Lubricants" released by Freedonia Group (Industrial Market Research and Consulting Company), the total demand of China's lubricating oil market will reach 10.2 million tons in 2017, while the total domestic lubricating oil output in 2016 is 6.87 million tons. With the stricter national environmental protection policy, the proportion of high-end and high-quality lubricating oil will gradually increase in the future, and the lubricating oil market segment will be more sound, and the profit margin will also increase.
4. Investment suggestions
We expect the company's net profit from 2017 to 2019 to be 124 million yuan, 153 million yuan and 181 million yuan respectively, and the corresponding EPS is 0.62,0.77 yuan and 0.91 yuan respectively. The current share price is 23.74 yuan, and the corresponding PE is 38,31 and 26 times respectively.
Risk hint: international crude oil and product prices fluctuate greatly; the progress of projects under construction is not as expected.
