Event: the company released its quarterly report for 2017 on October 24, with operating income of 817 million yuan, + 22.97% compared with the same period last year, and net profit of 36.79 million yuan, + 93.11% compared with the same period last year. The company's EPS in the first three quarters is 0.06 yuan. Among them, the net profit in the third quarter was 19.32 million yuan, + 737% compared with the same period last year. The company's performance is in line with expectations.
The price of the product has risen, the price gap has widened and the gross profit margin has reached a new high. Since July, the downstream copper clad laminate industry has continued to thrive. The price of epichlorohydrin at the cost side has continued to rise from 7600 yuan / ton to the current 12000 yuan / ton, pushing up the price of epoxy resin from 16000 yuan / ton to the current 21000 yuan / ton, an increase of more than 30%. The theoretical price difference has widened from less than 5000 yuan / ton to about 7000 yuan / ton. According to the operating data disclosed by the company, the company's single-quarter sales of epoxy resin in the first three quarters were 16626, 18853 and 19979 tons respectively, the average prices were 15073, 14127 and 14971 yuan / ton respectively, and the theoretical price differences were 4673, 4262,5001 yuan / ton respectively. The price difference of epoxy resin in the third quarter is about 800 yuan / ton, which is consistent with the trend we have tracked, and the sales volume has also increased to a certain extent. Benefiting from the increase in product prices, the company's single-quarter gross profit margin reached 15.33% in the third quarter, the highest since the company went public, up 4.41% from 10.92% in the third quarter of last year and 5% from 10.33% in the second quarter. The company's performance inflection point is obvious.
Fund-raising project drive, open the growth space. The company is an electronic grade epoxy resin leader, the main downstream is copper clad laminate, the main customers include Jin'an Guoji, ultrasonic electronics, Shanghai South Asia and so on. On September 12, 2017, the company obtained the notice for filing the pilot production (use) Plan of Hazardous Chemicals Construction Project. On September 27, 2017, the company successfully put into production for the first time. The company has an existing production capacity of 73000 tons, and after raising and investing 117000 tons of production capacity, the company's production capacity will reach 190000 tons. High-end products account for a relatively high proportion of fund-raising projects, which is expected to benefit from the sustainable development of the domestic copper clad laminate industry, achieve rapid volume, and significantly thicken the company's performance.
Valuation and rating. It is predicted that the net profit of the company from 2017 to 2019 is 65 million yuan, 120 million yuan and 170 million yuan respectively, and the EPS is 0.11,0.20 and 0.28 yuan respectively, corresponding to 56 times, 30 times and 21 times of PE respectively.
Risk hint. Crude oil price fluctuates sharply, and the production capacity of fund-raising projects falls short of expectations.
