Main points of investment
The company issued a forecast for the first quarter of 2018 on February 9, 2018. Performance is expected to rise in the same direction from January 1 to March 31, 2018. It is estimated that the net profit attributed to shareholders of listed companies during the period is about 6100-70 million yuan, an increase of 41% over the same period last year. In this regard, our comments are as follows:
The main business of modified plastics develops steadily and maintains a leading position in the industry. The company's main business is modified plastics, which is a first-class enterprise in the domestic modified plastics industry. The company has complete coverage of modified plastic products and strong growth of reinforced toughening materials and plastic alloy products. With the annual profit increase of this sector in 2017, on the one hand, the company makes use of the layout of capacity expansion to enhance economies of scale and drive up profits; on the other hand, as a leader in the industry, the company has rich experience in the field of modified plastics and good cost control.
It is expected that the annual profit growth rate of the main business sector in 2017 will be more than 50%, with a net profit of 90 million yuan. during the first quarter of 2018, the company maintained the growth trend, continuously improved its technical capacity, strengthened its internal management, and achieved performance growth.
The operation of Xingke Electronics, a wholly-owned subsidiary, is improving, and the two major advantages of technical customers guarantee the prospect. Xingke Electronics, a wholly-owned subsidiary of the company, is a full-process solution provider achieved by few enterprises in the field of CNC precision metal structures in China, and its performance has increased sharply year by year. It was incorporated into the consolidated statement in March 2017, which significantly improved the company's profitability, and its electronics industry business has become the company's second main business. Affected by Letv's problem, Xingke's performance is expected to decline from the end of 2016 to early 2017 compared with the same period last year. Xingke timely adjusted its major customer binding strategy to reverse losses and eliminated the dependence of key customers; and debt receivable with Letv was also resolved through "debt-to-equity swap". At present, Xingke customers are well-known brand supply chain, the future performance still has huge room for growth. Xingke Electronics is expected to continue to contribute to the company's performance growth in the first quarter of 2018.
Layout of lithium metal raw materials, new performance growth points can be expected. The company's recent layout of new energy lithium electricity upstream rare metal materials, frequent movements. In September 2017, the company jointly funded the establishment of Jubilee Cobalt Industry with Jia Jun and Zhang Zhiyi, and signed a "Strategic Cooperation Agreement" with Congo Huaxin Company in October 2017 to seek cobalt ore supply. At present, as a national strategy, new energy vehicles are expanding rapidly, and with the higher requirements for energy density of power lithium batteries, the demand for ternary materials will break out quickly, which is good for the upstream cobalt ore; in addition, the company has been deeply ploughing automotive modified plastics for many years. recent actions are conducive to infiltrating new energy vehicle customers and feeding traditional business. It is expected that there will be a certain synergy between new and old businesses in the long run, which will continue to improve the company's performance while following the trend of the automotive industry.
Risk tips: 1. The competition of modified plastics and metal CNC industry intensifies; 2. The investment and development of cobalt and other metal raw materials is uncertain; 3. The price of raw materials fluctuates.
Profit forecast and valuation. We are optimistic about the good development of the company's traditional business, Xingke's new order volume and its layout in the new energy industry chain, maintaining the company's 19-year EPS forecast of 0.76max 1.10 yuan, maintaining the target price of 22.70 yuan, and maintaining the "buy" rating.
