Event
The company announced its results on the evening of February 26, KuaiBao. In 2018, the company achieved revenue of 729 million yuan, an increase of 13.9% over the same period last year, and a net profit of 149 million yuan, an increase of 17.6% over the same period last year. The weighted average ROE of 2018 was 11.12%, down 1.40% from 2017.
Brief comment
Steady growth in performance, basically in line with expectations
The company's previous performance forecast net profit range of 1.46-158 million yuan, the performance KuaiBao net profit fell in the performance forecast range, but in the lower half of the region. The annual results correspond to Q4's single-quarter revenue of 216 million yuan, an increase of 29% year-on-year and 45% month-on-month; the net profit per quarter was 36.44 million yuan, up 80% year-on-year and 8% month-on-month. The increase in the company's performance compared with the same period last year was mainly due to the expansion of the revenue scale of ①; the company acquired 10% of Green Light and 34.49% of Changsha Xinyu during the ② reporting period; ③ previously mentioned in its performance forecast that the impact of non-recurring profits and losses on net profit in 2018 was 1000-15 million yuan, compared with 5.97 million yuan in the same period last year.
Extension mergers and acquisitions continue to build an integrated upstream and downstream industry chain
At the end of 2018, the company increased capital and acquired 34.49% of Changsha Xinyu, which is currently the largest manufacturer of photosensitive initiator products in China, and its wholly-owned subsidiary Nantong Xinyu mainly produces paints and paint additives. the two businesses are closely related to the company's traditional photoinitiator business and future development direction of radiation curing coating business, which is expected to form a significant synergy. Before this merger, the company acquired Green photosensitive in August to enter the downstream light-curing materials field, and then decided to increase the acquisition of upstream company Jiaying photosensitive in 2016. Continuous epitaxial mergers and acquisitions are expected to enable the company to rapidly expand its scale and realize the construction of an integrated upstream and downstream industrial chain.
The main business is growing steadily, and LCD optical initiation is expected to contribute considerable increment.
In 2017, the output of PCB photoinitiator, PCB resin, LCD photoinitiator and semiconductor photoinitiator was 894,81.7,18.1 tons respectively. In recent years, the company's revenue and gross profit of display-specific chemicals have continued to increase, and the reported gross profit has reached nearly 40% in 2018, making it the largest business in essence. According to our statistics, by 2020, the domestic LCD production capacity will reach 141 million square meters, an increase of 114% over 2017, corresponding to a new LCD photoresist market size of about 5 billion yuan. The company's LCD photoresist chemicals are expected to contribute considerable growth in the future.
Join hands with Yu Ra Optoelectronics and LG Chemistry to create a domestic OLED terminal material leader.
According to IHS, the OLED penetration rate of mid-and small-size screens will reach 45.7% in 2018; shipments of OLED TVs on large screens will grow by about 65%. According to our estimates, the global shipping area of OLED panels will grow from 4.97 million square meters in 2017 to 19.77 million square meters in 2021, with an average annual compound growth rate of 41 percent. The shipping area of domestic OLED panels will increase from 80,000 square meters in 2017 to 4.09 million square meters in 2021, with an average annual growth rate of 169 percent. The market space of domestic OLED terminal materials will reach 3.09 billion yuan by 2021. In August 2016, the company established a joint venture with Taiwan Yu Ra Optoelectronics and other companies, focusing on OLED terminal materials, which was put into production in September 2017; in July 2018, Qiangli Yu Ra and LG signed a cooperation agreement to jointly set up OLED "material Evaluation Laboratory". The company now has 6 sublimation equipment and one evaporation machine, and plans to add another 10 Shenghua machines this year.
UV-LED ink is developing at the right time, at least two powerful new materials are being rebuilt in the project under construction.
UV-LED inks are rapidly replacing traditional solvent-based inks because of their wide adaptability, higher quality, no VOCs emissions and low cost. According to market research company TechNavio, the global UV-LED technology will grow at an average annual compound growth rate of 39% from 2015 to 2020, with the Asia-Pacific region growing at 39.31%. The annual output of all inks in China is about 710000 tons, because about 60% of the weight of traditional solvent inks volatilizes after drying, and its dry weight is about 300000 tons. If 30% of the UV-LED inks are replaced by UV-LED inks, the demand for UV-LED inks is about 9-150000 tons, with a market size of 108-18 billion yuan at a price of 120,000 yuan per ton. The company reported that it had added optoelectronics-an annual output of 12000 tons of environment-friendly photoinitiator, an annual output of 50000 tons of UV-LED high-performance resin and other related raw materials and pilot plant projects, and announced the acquisition of 10% equity in Green photosensitive in early August, extending the industrial chain downstream. Green photosensitive light is expected to be strongly injected in the future.
According to the Changzhou High-tech Zone News, the company's construction project and Green photosensitive construction project will contribute about 400 million yuan in net profit after tax, which is equivalent to more than two powerful new materials.
It is estimated that the company's net profit in 2019 and 2020 will be 2.3 and 310 million yuan respectively, corresponding to EPS 0.90,1.21 yuan and PE 36X and 26X respectively.
