This report is read as follows:
Soda ash prices will rise slightly, glass prices will remain strong, glyphosate prices are expected to stabilize, while new projects have been put into production to contribute to performance. In addition, the high employee shareholding demonstrates the company's confidence in development. Cover for the first time, give cautious overweight rating.
Main points of investment:
Cautiously increase the rating: the profits of the main business have stabilized, and it is estimated that the EPS 0.06 in 2019-2021 will be 0.07 to 0.08 yuan. Considering that the company's new projects will be put into production one after another, the comparable company will give it a price-to-earnings ratio of 29.80 times in 2019, corresponding to the target price of 1.74 yuan, covering for the first time and giving it a "prudent overweight" rating.
Chemical industry, agriculture, new materials three major areas of common development, high employee shareholding shows confidence.
Hebang Biology, located in Leshan, Sichuan, has formed a business pattern of common development in the fields of chemical industry, agriculture and new materials. Its revenue has increased steadily year by year, and its CAGR in 2012-18 has reached 22.97%.
The company has an annual production capacity of 1.1 million tons of soda ash, 50,000 tons of glyphosate, 180000 tons of diglyphosate, 465000 tons of special glass and 4.3 million square meters of coated glass. The company plans to implement 399 million yuan employee stock ownership plan at the concession price of 1.77 yuan per share, which covers a wide range and can effectively rally the hearts of the people.
Soda ash prices will rise slightly, glass prices will remain strong, and glyphosate prices are expected to stabilize. At the beginning of August, the inventory of soda ash manufacturers has fallen back to the historically low level of 430000 tons. The current market price is 1600 yuan / ton, up 25 yuan / ton from the bottom of July. Near the time of price adjustment at the end of the month, prices are expected to rise slightly. Glass inventory is better in the second quarter, supporting glass prices have rebounded continuously since July, and prices will remain strong with the advent of the peak season. Glyphosate, double glyphosate boom linkage, near October 1, northern glycine enterprises may usher in the suspension of production and emission reduction, prices are expected to stabilize.
Methionine and diglyphosate projects have been put into production one after another. 70,000 t / a methionine is expected to be put into production, and the price is currently at a 10-year low. Considering the high oligopoly in the global market and the anti-dumping investigation launched by China, the price is expected to stabilize in the future. The diglyphosate process optimization project is expected to be put into production in January 20, the production capacity will increase to 220,000 tons / year, and iminodiacetonitrile will be completely self-sufficient.
Risk hint. The progress of production expansion is slow and the intensity of environmental protection is lower than expected.
