Steady growth in performance and looking forward to the release of capacity
Events:
The company released its annual report for 2017. during the reporting period, the company realized operating income of 896 million yuan, an increase of 9.12% over the same period last year, realized net profit of 120 million yuan belonging to shareholders of listed companies, up 5.64% over the same period last year, and deducted non-net profit of 116 million yuan for shareholders of listed companies, an increase of 7.43% over the same period last year. It is proposed to pay a dividend of 2 yuan (including tax) to all shareholders for every 10 shares.
Comments:
1, product positioning differentiation, high-end, automotive lubricating oil guarantee performance steady growth in 2017 global lubricating oil demand reached 35.7 million tons, the Asia-Pacific region accounted for nearly 40% of the global lubricating oil demand, followed by North America (26%) and Europe (22%). According to the industry data of China Lubricating Oil Information Network, as of December 2017, China's lubricating oil market demand reached 5.3 million tons (excluding white oil, rubber oil, antifreeze, etc.), an increase of 1.9 percent over the same period last year. In recent years, with the "consumption upgrading" of the market, the demand for lubricating oil products is becoming more and more diverse in the future. China's lubricating oil industry has shifted from the stage of rapid growth to the stage of high-quality development.
The company focuses on the R & D, production and sales of automotive lubricants, industrial lubricants, automotive chemicals and automotive care products, positioning in the target market of medium and high-grade quality, product positioning differentiation, high-end, good market awareness. In 2017, the company's revenue was 896 million yuan and automotive lubricating oil revenue was 750 million, accounting for 83.79%, which became the main guarantee of the company's performance.
2. Looking forward to the release of the production capacity of the Huangdao project, the competitive marketing channel company's Laoshan plant has a production capacity of 61000 tons, and the Huangdao Industrial Park project that was put into production in September 2017 has a production capacity of 100000 tons (80,000 tons of lubricating oil, 20,000 tons of antifreeze and 2000 tons of brake fluid). However, the current capacity utilization is not high, which is 55.42% and 22.53% respectively. With the gradual release of the production capacity of Huangdao Industrial Park, the company's performance will be significantly thickened. The company has more than 600 first-class dealers, the marketing system is more competitive.
3. Benefiting from the development of the automobile industry, the domestic automotive lubricating oil market continues to grow. with the vigorous development of China's automobile industry, by the end of 2017, the number of motor vehicles in China was 310 million, of which 217 million were cars. The growth rate of car ownership in China has exceeded the growth rate of new cars, and the huge number of cars means that the lubricating oil industry still has great growth potential. In the future, there will be broader development prospects in the AM market of automotive lubricants, automotive chemicals and automotive maintenance products.
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 estimate that the company's net profit from 2018 to 2020 is 142 million yuan, 158 million yuan and 171 million yuan, respectively, and the corresponding EPS is 0.71 yuan, 0.79 yuan and 0.85 yuan respectively. The current share price is 13.75 yuan, corresponding to 19.4,17.4 and 16.1 times PE, respectively.
Risk hint: international crude oil and product prices fluctuate greatly; the progress of the project is not as expected.