The company issued a forecast for the first quarter of 2018. The company expects to return to its mother in the first quarter of 2018 with a net profit of 2.6-320 million yuan, an increase of 678.51% and 858.16% compared with the same period last year.
The increase in the price of VE led to a big increase in the company's performance. The main source of profit for the company's 17Q1 is Mouli Information (it only started selling VE in March 17), and the growth of 18Q1's performance was mainly contributed by VE.
Due to the BASF citral accident and the strict environmental protection in China, the price of VE has risen from 45 yuan / kg in October 17 to 120 yuan / kg in January 18, and now it is 105 yuan / kg. We expect VE prices to remain high until BASF resumes supply in June. The company currently has 400 million tons of VE (powder) production capacity and basically full production, VE (powder) price increase of 10 yuan / kg thickness of the company's annualized net profit of about 306 million (EPS 0.12 yuan).
At present, the company is still rapidly opening up the market, and the annual results for 18 years are expected. According to the median of the performance forecast, assuming that 18Q1 plastic rice information brings about 45 million net profit, then VE brings a total net profit of 290 million. Assuming that the cost of Nengte VE is 25 yuan / kg (excluding tax), it can be estimated that the selling price of Nengte VE in the first quarter is about 70 yuan / kg (including tax). Considering that the average VE price from December 17 to February 18 (corresponding to company Q1 sales) is 110RMB / kg, there is still a certain difference between the company's VE selling price and the market price, we believe that the difference reflects the company's need to enter the market as soon as possible as a new entrant to VE and the lag of order price adjustment. It is expected that after the gradual completion of capacity climbing, it is expected to become the leader of VE by virtue of cost advantage.
After the release of VE performance, other products brought about by the company's capacity expansion and technological advantages are worth looking forward to. The company will fully enjoy the current cycle of price increases after the completion of 20,000 tons of VE, and the profits brought by VE will effectively support the company's further expansion. The company has quickly launched a new 10, 000-ton VE environmental impact assessment, according to the company's 20, 000-ton VE construction schedule is expected to be put into production in 19 years, when the company will become the world's largest VE production enterprise. In addition, the company has a strong base of research and development and pharmaceutical intermediates. In 16 years, the company has put into production 3000 tons of o-cresol (production of pesticides), 7000 tons of 2-cresol (production of PPO) and 120 tons of front-end intermediates of statins, and is expected to further reduce comprehensive costs and enrich the product line through related diversification in the future.
We estimate the company's 19-year net profit of 1,562 million EPS 0.59 and 0.45 yuan for PE, corresponding to the current price of 10.5X, with a buy rating.
Risk hint: plastic rice information performance commitment has not been completed; VE price fell.