Main points of investment:
The company deeply ploughs the market of benzene intermediates and has a great competitive advantage in heat-sensitive products. The company is mainly engaged in the production of benzene intermediate products, with "m-amino" products as the mother core, extending the product chain downward, consolidating dye intermediates, developing fiber intermediates and pharmaceutical intermediates, forming a "one-chain, three-body" pattern. The effect of circular economy is obvious, and the production cost is lower than that of peers. The company has the production capacity of the whole production chain of "m-amino-sodium m-aminobenzenesulfonate-m-aminophenol-OBD-2", in which the production capacity of m-amino group is 8000 tons / year (the first in the world), the capacity of m-aminophenol is 2000 tons / year, and that of OBD-2 is 1000 tons / year. In addition, the company also has a production capacity of 2600 tons / year for m-hydroxy-N and N-diethylaniline and 5000 tons / year for 2pai5 acid, all of which are the largest in the world.
Under the environmental protection to remove the production capacity, the product price soars sharply, the company performance elasticity is big. The company has persisted in environmental protection investment for many years. Under the long-term trend of strict environmental protection, domestic competitors Kang Aite, Fukang and Ke Meilin have been shut down or reduced production, while the company has basically maintained full capacity production since 2017.
According to the quotations of the company and competitors, the market price of m-aminophenol rose from 76,000 yuan / ton in 2017 to more than 200,000 yuan / ton in April 2018, and the market price of OBD-2 soared from 113,000 yuan / ton in 2017 to more than 350,000 yuan / ton in the first quarter. In 2017, the company achieved revenue of 536 million yuan, an increase of 61.8 percent over the same period last year, of which the revenue ratios of m-aminophenol, m-hydroxyl and OBD-2 were 28.5%, 25.4% and 21.1%, respectively, and the net profit belonging to the shareholders of the parent company was 87.076 million yuan, an increase of 282.7% over the same period last year. In the first quarter of 2018, the company's revenue was 274 million yuan, an increase of 176.1% over the same period last year, and the net profit belonging to the shareholders of the parent company was 114 million yuan, an increase of 2,233.25% over the same period last year.
Technical and environmental barriers are high, and prices are expected to remain high for a long time. The industrial wastewater (such as aniline) produced by the company is difficult to degrade and highly toxic, and it is difficult to degrade it completely by the general treatment process. The company independently developed a complete set of systematic wastewater treatment facilities that can meet the relevant national regulations, and obtained the invention patent. Through the treatment process of "multi-effect evaporation + desalination + micro-electrolysis + catalytic oxidation + biochemical + concentrated water incineration", 80% of the industrial wastewater has been reused, and the remaining 20% has reached the discharge standard. The company's main domestic competitors are mostly small-scale production enterprises, the strength is weak, and in Shandong, Hebei and other areas with greater pressure on environmental protection, in the face of the company's technical and environmental barriers, it is difficult to expand production in the short term. Therefore, in the case of limited space for production expansion, the prices of products such as m-aminophenol and OBD-2 may remain high.
Profit forecast and investment rating. The company is mainly engaged in the production of benzene intermediate products, with "m-amino" products as the mother core, forming a "one-chain three-body" pattern, with significant cost advantages. Among them, the supply of m-aminophenol and OBD-2 has been tight for a long time. The company is leading in environmental protection technology, and under the trend of long-term environmental inspection, we are optimistic about the long-term development of the company. It is estimated that the EPS of the company from 2018 to 2020 is 1.09,1.16 and 1.25 yuan per share, respectively, and the PE of the corresponding share price is 12.32,11.49 and 10.73 times. Coverage for the first time, giving a "overweight" rating.
Risk tips: low downstream demand; overseas competitors to expand production; production safety and environmental protection risk; the risk of large fluctuations in product prices.
