Event: revenue in the first half of 2019 was 521.84 million yuan, an increase of 7.1%, net profit of 57.85 million yuan, an increase of 7.3%, and net profit of 52.29 million yuan after deducting non-recurrent profit and loss, an increase of 28.0%. In the second quarter, the non-return net profit was 39.5 million yuan, an increase of 120%. Since the second quarter, potassium tetrafluoroaluminate has gradually become the main source of profit growth.
Potassium tetrafluoroaluminate is well popularized. In the first half of 2019, the company sold 22000 tons of aluminum grain refiner, unchanged from the same period last year; potassium fluoroaluminate products sold 9000 tons, up 149.6 percent over the same period last year; and fluorite powder sold 10000 tons, up 51.7 percent from the same period last year. The company has accelerated the market promotion of potassium tetrafluoroaluminate, an energy-saving material for aluminum electrolysis. At present, it has achieved its industrial application in domestic aluminum electrolysis enterprises, and the product application effect is good.
The non-recurrent profit and loss in the first half of the year was only 6.57 million yuan (15.45 million yuan in the first half of 2018), and the profit growth mainly came from the sales of potassium tetrafluoroaluminate.
Potassium tetrafluoroaluminate drives the overall gross profit margin to increase 2.8PCT. In the first half of 2019, the comprehensive gross profit margin of the company's products was 22.7%, with an increase of 2.8PCT. The increase in gross profit margin is mainly due to the fact that the gross margin of potassium tetrafluoroaluminate is higher than that of aluminum grain refiner products.
The rate of expenses has remained stable. In the first half of 2019, the company's sales rate / financial rate / management rate was 2.3%, 0.6%, 6.8%, respectively, with an increase of-0.4PCT/0.4PCT/0.2PCT. The slight increase in management fees is mainly due to the increase in management compensation and depreciation, while the increase in sales rates is mainly due to the increase in interest expenses and the decrease in interest income in the current period.
The slight narrowing of cash flow may be related to the opening of the market by potassium tetrafluoroaluminate. In the first half of 2019, the cash flow of the company's operating activities was 71.76 million yuan, an increase of-26.6%, and accounts receivable was 284.7 million yuan, an increase of 16.4%. The cash flow narrowed slightly and accounts receivable increased or related to the initial opening of sales of the new product potassium tetrafluoroaluminate.
The construction of other production lines has been accelerated. ① in the first half of 2019, Luoyang Xinxing 30,000 tons / year aluminum grain refiner project was put into production. ② Shenzhen plant retains an aluminum grain refiner capacity of 30,000 tons per year, and gradually transforms to other high-end alloys (aluminum-titanium-carbon, aluminum-boron, aluminum-beryllium, aluminum-vanadium, aluminum-niobium). ③ Henan Luoyang aluminum alloy processing particle refining agent project production line construction accelerated. The ④ electronic grade hydrofluoric acid project is in the pilot stage. SB powder, the raw material of ⑤ petroleum catalyst carrier, has completed the pilot test and is under construction.
Profit forecast: the company is the leader of aluminum grain refiner, with a new production capacity of 30,000 tons of aluminum grain refiner in 2019, and the main business is expected to continue to grow. At the same time, with the high barrier of potassium tetrafluoroaluminate preparation process, the company is expected to quickly open the market in the field of electricity saving in electrolytic aluminum. We expect the company's 2019-2021 net profit to be 2.1x32cm, corresponding to EPS 1.29max 1.97pm 2.75RMB / share, corresponding to PE 23.1X/15.1X/10.8X, maintaining a "buy" rating.
Risk hint: aluminum grain refiner grain refiner sales price risk, potassium tetrafluoroaluminate sales are not as expected, other manufacturers master the synthesis technology of potassium tetrafluoroaluminate.