Events: the company announced its semi-annual report of 2019, with revenue of 2.713 billion yuan during the reporting period, a decrease of 2.33% over the same period last year; net profit of 172 million yuan, a decrease of 47.33%; a deduction of 182 million yuan, a decrease of 39.98%, and a net cash flow of 78.23 million yuan, a decrease of 83.41%; EPS0.141 yuan. In the second quarter alone, the company achieved revenue of 1.387 billion yuan, an increase of 4.39% over the previous quarter, and a net profit of 83.86 million yuan, a decrease of 5.44% compared with the previous quarter.
Multiple factors led to a decline in performance compared with the same period last year, and the decline in the first half of the 600000-ton MTO project was mainly due to lower chemical product prices, increased costs, lower equity participation benefits and new debt interest. From a sub-business point of view, chemical business revenue fell 6.97% year-on-year, gross profit margin declined 0.98pct, medical services and biomedical revenue increased by 7.24% and 9.87%, respectively, gross profit margin changed-5.30pct/+3.13pct. The main source of profit is that all units in Nanjing Chengzhi maintained relatively high load in the first half of the year, but due to changes in supply and demand in the industry, fluctuations in crude oil prices, intensified trade frictions and weaker downstream demand, the prices of products such as olefins and polyols decreased significantly compared with the same period last year, and have an impact on sales revenue and net profit. In addition, the development of new business led to an increase of 82.92% in management costs and 58.41% in financial expenses as a result of new debt interest. The above two factors also had a certain impact on the results in the first half of the year. During the reporting period, Chengzhiyongqing 600,000 tons / year MTO project was successfully put into operation in June, and the company's revenue scale will increase significantly in the later period, waiting for the repair of profitability under the advantages of location and volume.
Promote the acquisition of Yunnan Han League and strengthen the pattern of one body and two wings
During the reporting period, the company launched and promoted the acquisition of shares in Yunnan Hanmai and its capital increase. Yunnan Han League is mainly engaged in the processing of industrial hemp, from which the effective components hemp diol and full-spectrum oil are extracted. This business has similar technological basis, product application and target market with the existing R & D and production of the company's life technology plate. It has good cooperation, which is of strategic significance for the company to enter the industrial marijuana industry. After the completion of the acquisition, the company's "one body and two wings" business pattern, which is dominated by Nanjing Chengzhi clean energy, supplemented by functional materials and life science and technology, will be further strengthened.
Maintain the "overweight" rating: the large-scale production of low-cost olefins in North America has a significant impact on the global olefin market. The company has lowered its profit forecast for 2019-2020 and increased its profit forecast for 2021. The estimated net profit is 5.81,8.36 and 928 million yuan respectively (the previous one is 10.82,11.54 and-100 million yuan), and the corresponding EPS is 0.46,0.67,0.74 yuan respectively. The acquisition of industrial marijuana assets opens the room for the growth of the life technology business and maintains the "overweight" rating.
Risk tips: the risk of oil price fluctuations, rising raw material prices, the promotion of new projects is not as expected.
