Main points of investment:
Leading company of leather chemicals. Dawei Co., Ltd. is a leading leather chemical manufacturing company in China, mainly engaged in the production and sales of more than 200 fine chemicals based on clean leather materials, leather functional auxiliaries, finishing materials and colorants. From 2015 to 2017, the company's revenue was 275 million yuan, 299 million yuan and 333 million yuan respectively, an increase of 1.72%, 8.76% and 11.21% over the same period last year. In the same period, the net profit of returning home was 48.0919 million yuan, 57.8211 million yuan and 51.7542 million yuan respectively, up 19.71%, 20.23% and-10.49% over the same period last year. In recent years, the company's comprehensive gross profit margin is basically stable at about 48%, and its profitability is stable.
Current situation of leather industry and competitors. With the rapid development of domestic leather industry, more and more chemical manufacturers are constantly transferring to China. As of 2016, there are about 1000 leather chemical production enterprises in China, and more than 30 enterprises above scale. According to the new survey of leather chemical market and the survey data of China Leather magazine, by 2012, China's overall leather chemical production capacity has reached 600000 tons per year, with sales reaching 10 billion yuan, with domestic companies accounting for 60%.
At present, the company's main competitors are Longsheng Group, BASF AG, Starr Group, Derry Group, Clariant Group and so on.
Market-oriented R & D model, a wide range of products. At present, the company has established specialized production and R & D bases in Sichuan and Shanghai, and has built a full range of multi-level product system by virtue of market-oriented and forward-looking R & D mode. at present, it has formed the production capacity of more than 200 kinds of products in four categories, including clean leather materials, leather functional auxiliaries, finishing materials and colorants, covering the whole process of leather production. It is one of the companies with the most complete variety and series of leather chemicals in China.
Invest in building factories to expand production capacity. In 2016, the company raised funds through listing for the construction of clean leather chemical materials and high-performance leather chemicals (53000t/a scale) project, 18000t/a-scale environment-friendly leather chemicals technological renovation and expansion project, headquarters base and leather green chemicals and leather clean technology research and development center, a total of three construction projects. Among them, the 18000 tons / year environmental protection leather chemicals expansion project of Shanghai Jinshan District No. 2 Industrial Park has been put into production, and the new environmental protection leather chemicals project company of Xinjin No.2 Plant is expected to be completed by the end of 2018.
Profit forecast and valuation space. We estimate that the company's net profit from 2018 to 2020 will be 57 million yuan, 66 million yuan and 75 million yuan respectively, and the corresponding EPS will be 0.55,0.63 yuan and 0.71 yuan respectively. We will give the company 22-28 times PE in 2018, corresponding to a reasonable value range of 12.10-15.40 yuan, giving a neutral rating for the first time.
Risk hint. The sales of products are not up to expectations, the risk of fluctuations in raw material prices, and the progress of fund-raising projects is lower than expected.
