Performance summary: in the first quarter of 2019, the company achieved operating income of 150 million yuan, an increase of 28.6% over the same period last year, and a net profit of 36.532 million yuan, an increase of 36.8% over the same period last year, exceeding the upper limit of the previous quarter's performance forecast and exceeding our previous expectations.
Photoinitiator industry segmentation leader, with raw material advantages. The company is mainly engaged in the research, development, production and sales of photoinitiators, sulfhydryl compounds and their derivatives. The main product photoinitiator 907 has the first market share in the domestic market. The company has the strength of 907 raw material anisole sulfide large-scale production, with the production capacity of the whole industry chain from raw materials to final products, obvious advantages in cost and raw material guarantee. At present, the company has two production bases, respectively in Shangyu and Jiangxi, producing a series of photoinitiators and sulfhydryl compounds and their derivatives, with a production capacity of 2000 tons.
Three major factors lead to high performance growth. According to the strategic planning and arrangement, the company implemented the relevant plans one by one, and gradually increased the sales price of the products while keeping the market supply and demand relatively stable. Compared with the same period, the price of the company's products increased to a certain extent, and the sales volume was basically flat. Secondly, the company continues to improve the process, technology and quality of products, which has won further recognition in the market. Some reserve varieties of sulfhydryl compounds have been effectively promoted and expanded in the downstream market, which has become a new profit growth point of the company. Third, exchange losses have decreased, and financial expenses have dropped significantly compared with the same period last year.
Invest 500 million yuan to build the first phase of Inner Mongolia project to consolidate the position of the industry. The company has built a 29000-ton photoinitiator and pharmaceutical intermediate project in Alashan, which will be completed and put into production in the second half of 2019 and gradually release production capacity. The project will help the company to expand its product categories in the field of photoinitiators and pharmaceutical intermediates, improve the industrial chain and enhance its core competitiveness. The project will have a huge impact on the company's profit growth over the next three years.
Profit forecast and rating. Without adjusting the profit forecast for the time being, it is estimated that the EPS from 2019 to 2021 will be 1.36yuan, 1.70yuan and 2.08yuan respectively. In the next three years, the return net profit will maintain a compound growth rate of 23% and maintain the "buy" rating.
Risk tips: environmental protection risk, production safety risk, market risk, the progress of projects under construction or proposed construction, or the risk of not meeting expectations, and the risk of too much new production capacity in the industry.
