Main points of investment:
Domestic middle and high-end chemical materials distribution industry leader. The company is a high-end chemical and electronic materials application service-oriented distributor, through professional services to meet customer demand for material application quality, speed, cost and innovation, to achieve the sales of middle and high-end chemical and electronic materials. The middle and high-end chemical and electronic materials distributed mainly include chemical materials such as engineering plastics, elastomer plastics, mobile phone paints, and electronic materials such as silver paste and polarizers of solar cells, which are mainly used in the manufacture of downstream mobile terminals, home appliances, LED lighting, solar energy and other market segments, and are the leaders in the domestic middle and high-end material distribution industry.
The technical service force is profound, and the inventory coordination advantage is obvious. Due to the complex application of middle and high-end chemical and electronic materials, the distribution industry is required to provide professional application services. As the forerunner of the domestic material distribution industry, the company has a profound internal technical service force and rich technical service case base, forming a first-mover advantage and professional advantage. At the same time, relying on the information processing of the industrial chain, the company has established the advantage of inventory collaborative optimization to serve the downstream customer base, and creatively carried out VMI inventory management, grasped the panorama of order demand operation in time, and carried out centralized coordination and optimization and flexible supply of the inventory of the entire customer base.
Keep up with the international giants and drive industry integration. The size of the distributor industry is mainly determined by the downstream market. According to the company's 2017 semi-annual report, the scale of China's new material industry has maintained steady growth since 2010, from 650 billion yuan in 2010 to 2 trillion yuan in 2015. At present, the North American and European market is very mature and the industry is highly concentrated. In 2016, the international giant Buntai of Germany achieved sales revenue of about 10 billion euros. There are more than 9000 enterprises of the same type in China, and the industry concentration is very low. as the only listed company in China, the company is in a leading position and has an inherent advantage in industry integration.
Endogenous development and extension development, waiting for performance improvement. In the first three quarters of 2017, the company achieved operating income of 729 million yuan, an increase of 18.5% over the same period last year, and a net profit of 10.8494 million yuan, down 60.7% from the same period last year. The decline in performance is mainly due to the company's increased technology research and development and market expansion. In the future, the company plans to continue to dig deep into the market segments with traditional advantages, and on this basis to explore the application of new energy vehicles, AR, smart wear and other fields, to explore new profit growth points. In terms of extension, the company will focus on the main industries of mid-and high-end chemical and electronic distribution, merge and acquire the target enterprises in the field of strategic development of the company, and continue to maintain the company's leading position in the distribution industry through industry integration.
Profit forecast: the global new materials market is booming, the company's leading advantage is significant, at the same time the development of endogenesis and extension, the performance is expected to be improved. We estimate that the EPS of the company in 17-19 is 0.50,0.59,0.70 yuan respectively. The company is in the period of business development and its performance is still at a low level, so it will not be rated for the time being.
Risk hint: the risk of relying on major suppliers; the risk of technical service deviation affecting the company's operation.