Main points of investment:
The domestic superfiber field is absolutely the leader, with relatively stable profitability, gross profit margin, period expense rate and net interest rate remain stable, and better than other companies in the same industry. At present, the company has a superfiber production capacity of 81.25 million meters, and in 2018 the company raised funds through a non-public offering (feedback from the CSRC) to continue to expand production. After the completion of production expansion, the company's total production capacity reached 150 million meters, firmly sitting in the domestic superfiber leader. The company has a relatively stable profitability and internal cost control level, the average gross profit margin of manufacturing business is about 20%, the gross margin of technical service fees remains stable about 81%, the expense rate is about 13% during the period, and fluctuates within 0.3%. In the future, the company will gradually achieve import substitution in superfiber high-end products, and it is expected that the increase in the proportion of high-end products after production expansion will enhance the company's profitability.
The strictness of environmental protection accelerates the substitution of superfiber for real leather, artificial leather and synthetic leather. There is still a big gap in the supply of superfiber in our country. Shoe leather is now the most important application field, accounting for about 45%, automotive, medical, clothing and other high-end applications are relatively small.
The demand for superfiber is about 276 million in 2018. According to the China Plastics processing Industry Association, the demand for synthetic leather will reach 5.29 billion meters by 2020, of which the demand for superfiber is expected to reach 334 million meters. The proportion is 6.31%. The compound growth rate of superfiber demand from 2018 to 2020 is expected to reach 10.04%. By the end of 2017, the total production capacity of China's domestic superfiber enterprises is about 138 million meters, the actual output is 121 million meters, the demand is about 204 million meters, the supply gap is obvious, and high-end superfiber products are still mainly imported. Compared with Japan, superfiber accounts for 50% of artificial leather and synthetic leather, there is still a lot of room for substitution.
The merger and acquisition of Weifutong, a technical service provider in the field of mobile payment, has opened a dual-main business development model, and plans to change its name to "Huafeng Technology" to highlight the company's business development. With the rapid development of mobile payment, it has become the mainstream payment method generally accepted in China, and the stricter supervision has become a definite trend. After "breaking the direct connection", the clearing platform occupies a dominant position in mobile payment, and service online coupon or UnionPay has become a new direction of profit for payment enterprises. And online payment gradually infiltrated into offline payment is also an inevitable trend.
Re-layout, unicorn Fortis will lead the company's technical service business to take off for the second time. After rapid development, Weifutong's income remained basically stable from 2016 to 2018 under the influence of the policy, and the mobile payment business declined slightly in 18 years due to the influence of the central bank's "disconnection". On the one hand, Weifu Tong will carry out all-round cooperation with UnionPay, and on the other hand, it will launch solutions for different industries. We believe that the second half of 18 to 19 years is the deployment period of Weifutong UnionPay cooperation and industry solutions, 19 years began to gradually enter the harvest stage, contribute to revenue growth, and continue to open up new areas to maintain sustained growth.
Capacity expansion continues to stabilize the leading position of superfiber, and the technical service business is about to take off for the second time, maintaining the "overweight" rating. It is estimated that the net profit of superfiber from 2019 to 2021 will be 2.1x2.52x3.12, and the net profit for 2022 will be 406 million yuan. The net profit for Weifutong from 2019 to 2021 will be 1.68pm 1.98pm 2.38 respectively, and the net profit for 2022 will be 310 million yuan. To maintain the performance forecast of the company from 2019 to 2021, the net profit of return to the mother is 378, 4.5 billion yuan, respectively, and the new net profit of 2022 is forecast to be 716 million yuan. At present, the share capital is 1.136 billion shares, and the corresponding EPS is 0.33, 0.4, 0.48 and 0.62 per share respectively. Assuming that the expansion of the company's non-public offering is completed this year, it is expected that the new share capital will be increased by 110 million shares, the corresponding diluted EPS is 0.3x0.36 and 0.44x0.56 yuan per share, and the corresponding PE is 46X/39X/32X/25X respectively.
Risk tips: 1. The downstream demand of superfiber is low, and the digestion of the company is hindered after capacity expansion. The supervision of the mobile payment industry is stricter again in the process of development; 3. The progress of cooperation with UnionPay is lower than expected.
