Benefiting from the warming of coke prices, the company's performance has achieved rapid growth in 2018, and the advantage of the circular economy industrial chain is also expected to stabilize production costs. It is expected that the company's performance increment in the past two years will come from the newly put into production of 300000 tons of stable light hydrocarbon projects. In addition, the company actively promotes graphene-based mesophase carbon microspheres, needle coke and other new material industry projects, which is also expected to become a long-term performance growth point. For the first time, we have covered the "overweight" rating.
Net profit grew by nearly 112% in 2018. In 2018, the company's operating income / net profit was 3.56 billion yuan (+ 21.28% Universe 111.86% respectively), EPS was 0.21 yuan, deducting non-net profit 374 million yuan, year-on-year + 192.05%, mainly due to the better coke market and coal chemical products market, the company's production, sales and unit price increased significantly.
The volume and price of coke business has risen, and the sales volume of needle coke has increased significantly. In 2018, the company's coke sales volume was 1.4223 million tons (year-on-year + 7.44%), unit price was 1848.26 yuan / ton (year-on-year + 18.70%), and unit cost was 1474.82 yuan / ton (year-on-year + 13.09%), mainly due to the rising price of raw material coking coal. In the coal-based chemical industry, the company's methanol sales volume is 95200 tons (year-on-year-7.33%), unit price is 2348.94 yuan / ton (year-on-year + 1.81%), and unit cost is 652.93 yuan / ton (year-on-year-12.79%). The company sells 7788 million kilowatt-hours of electricity (year-on-year-46.56%), mainly due to the decrease in online electricity sales due to the increase in self-use of electricity in this period, with a unit price of 0.31 yuan / degree (year-on-year + 2.18%) and a unit cost of 0.24 yuan / degree (year-on-year + 17.64%). In terms of new materials, the company's needle coke series products are gradually recognized by customers, with production and sales volume of 1.79 million tons respectively, an increase of 1.4x/162x over the same period last year.
Build the industrial chain of circular economy and actively lay out new materials to promote industrial transformation. The company has formed a circular economy industrial chain of "coal coke, coke gas, methanol synthesis, stable light hydrocarbons, coking waste heat power generation, coking by-product coal tar deep processing, power plant residual steam heating". So that the cost of traditional business products is lower than the industry average. On the other hand, the company implements the transformation from coal chemical industry to new materials, and promotes graphene, mesophase carbon microspheres, needle coke and other new material industry projects. at present, it has formed a production capacity of 150,000 tons of graphene powder, 50,000 tons of needle coke and 300000 tons of stable light hydrocarbons (gasoline additives). Although the capacity utilization rate of these projects is low, it can become a source of long-term profit growth for the company.
Risk factors: a sharp slowdown in the macro-economy, affecting coke demand; the market promotion of new materials products is not as expected.
Investment suggestion: based on the cost advantage of the company's circular integration and the gradual contribution to profits of the new 300000 ton stable light hydrocarbon project starting from 2019, we estimate that the company's EPS will reach 0.33x0.46x0.58 yuan respectively in 2019-2021. The current stock price is 6.68 yuan, which corresponds to 2019 to 2021, respectively. With reference to the coking industry's long-term historical valuation center of 2 times PB, and considering that the valuation of the chemical sector is slightly higher than that of traditional coke, we give the company 2018 P/B2x, corresponding to the target price of 7.54 yuan, with a "overweight" rating for the first time.