Event: the company reported that the revenue in the first half of the year was 187 million yuan, down 8.74% from the same period last year, and the net profit was 18.46 million yuan, an increase of 6.63% over the same period last year.
Sluggish demand leads to a decline in revenue, and cost control ensures profit growth
Affected by the decline in downstream demand and increased competition in the industry, the company's revenue from single-dose products reached 148 million yuan in the first half of the year, down 13.66% from the same period last year, leading to a decline in overall revenue. Due to the growth of downstream demand and increased customer development efforts, the new product green methane and compound products achieved revenue of 23.74 million yuan and 10.71 million yuan respectively, an increase of 20.65% and 11.8% over the same period last year.
Benefiting from the decline in raw material costs, the company's gross profit margin increased by 0.7 percentage points compared with the same period last year, of which single-dose products, compound products and chloromethane increased or decreased by-3.72%, 18.24% and 21% respectively. During the period of the company, the cost was well controlled, and the proportion of three fees fell 0.7 percentage points to 13.6% compared with the same period last year. The increase in gross profit margin and the decline in expense rate led to a 6.63% year-on-year increase in the company's profit.
The company's exports account for 40% of its products and are settled in US dollars, with little impact on the exchange rate in the first half of the year. If the company benefits from the devaluation of RMB in the future, the gross profit margin and profitability will increase.
Sustainable growth relying on the new development of water treatment industry
The release of the Water pollution Prevention and Control Action Plan in April will have a significant positive impact on the industry. with the vigorous promotion of the PPP model, it is expected that environmental protection investment in various industries will continue to increase, and the water treatment agent market will maintain a growth rate of 15%. The company's products are widely used in chemical industry, iron and steel, electric power, petroleum, textile, printing and dyeing and other industries. The gradual implementation of the "Water Ten articles" will lead to the continuous growth of the company's performance.
Profit forecast and rating
China's water treatment agent industry has fierce competition and low concentration, so there is room for industry integration in the future. As the first A-share listed water treatment agent company, the scale advantage, technical advantage and brand advantage are strengthened after listing. At the same time, it will gradually enter into the fields of equipment manufacturing and engineering services, and further extend the industrial chain. With a new round of investment in the water treatment industry, the company is expected to exceed the growth rate of the industry to achieve faster growth, it is recommended to continue to pay attention. We estimate that the company's EPS for 2015-2017 will be 0.62 RMB 0.78 won, and the current share price will be multiplied by PE in 81-64-53, with a "overweight" rating.
Risk tips: raw material price fluctuation risk, exchange rate risk.