Event: according to the company's third-quarter results announcement, the net profit attributable to the owner of the parent company in the first three quarters was 651 million yuan, down 2.81% from the same period last year; operating income was 4.363 billion yuan, up 3.85% from the same period last year; and basic earnings per share was 0.5195 yuan, down 2.82% from the same period last year. Of this total, the net profit attributed to the owner of the parent company in the third quarter was 324 million yuan, an increase of 18.38 percent over the same period last year; operating income was 1.585 billion yuan, up 14.06 percent over the same period last year; and basic earnings per share was 0.2584 yuan, an increase of 18.37 percent over the same period last year.
The results were in line with expectations, and the rise in product prices contributed to the growth of results in the third quarter: the company's main products are polypropylene and syngas such as hydrogen and carbon monoxide. The settlement price of the main contract of polypropylene futures rose from 9179 yuan / ton in the second quarter to 9904 yuan / ton in the third quarter, and the price of liquefied petroleum gas rose from about 3800 yuan / ton at the end of the second quarter to 4500 yuan / ton at the end of the third quarter. The sharp rise in the price of the main products promoted the growth of the performance in the third quarter.
The company is the pioneer of domestic MTO process, with 600000 tons of production capacity in 2019 will be further enhanced profitability: subsidiary Nanjing Chengzhi (Nanjing Wisheng) is the domestic MTO process forerunner, the company currently has 300000 tons of MTO plant capacity, 600000 tons under construction capacity is expected to be put into production in 2019, with the further rise in polypropylene prices superimposed plastic ban will further enhance profitability in the future.
The controlling shareholder proposes to buy back the shares of the company, demonstrating his confidence in the future development of the company: based on his confidence in the sustained and stable development of the company in the future, the controlling shareholder proposes that the total repurchase amount in the secondary market should not be less than 240 million yuan, and the share repurchase price shall not exceed 20 yuan per share.
The company is the target of the rise in crude oil and natural gas: the price of crude oil determines the price center of propylene, while the prices of natural gas and syngas change in the same direction, and the company mainly buys raw materials for coal and methanol. In the case of fluctuations in the coal price range, the rise in crude oil and natural gas prices will lead to higher product prices and thus thicken the company's performance.
Investment advice: the company is a pioneer in the MTO field with rich operational experience. With the commissioning of 600000 tons of MTO units, the company's profitability will be significantly enhanced. We forecast that the EPS in 18-19-20 will be 0.71,0.84 and 1.09 yuan respectively, maintaining the "recommended" rating.
Risk hint: MTO plant put into operation less than expected risk, methanol plant put into operation less than expected risk, arbitration compensation risk, goodwill impairment risk.
