Event: the company's revenue in the first three quarters was 770 million yuan, up-0.4%, and the non-return net profit was 68.27 million yuan, an increase of 0.1%.
Affected by the decline in national aluminum production, the company's main aluminum grain refiner growth slowed down. The company's revenue in the first three quarters was 770 million yuan, an increase of-0.4%. The net profit of non-return to the mother was 68.27 million yuan, an increase of 0.1%. The revenue of the third quarter was 260 million yuan, an increase of-12.8%, and a net profit of 15.97 million yuan, an increase of-41.7%. According to the World Aluminum Network, China's aluminum production in the first three quarters of 2019 was 36.84 million tons, an increase of-6.6 per cent. As the demand of aluminum grain refiner is directly linked to the demand of aluminum, the company as the leader of aluminum grain refiner is affected.
The gross profit margin increases slightly, the cost rate is stable, affected by the prosperity of the industry, inventory increases. The company's gross profit margin in the first three quarters was 21.4%, which was related to the increase in 1.7PCT and the slight increase in gross profit margin or related to the increase in the proportion of income of potassium tetrafluoroaluminate with high gross margin. In the first three quarters, the sales rate / management rate / financial rate was 2.2%, 7.3%, 0.5%, respectively, and remained stable with the same increase of-0.3/0.7/0.3PCT. The cash flow of the company's operating activities in the first three quarters was 4.86 million yuan, compared with 149.51 million yuan in the same period last year, mainly due to the slowdown in sales of aluminum grain refiners in the first three quarters due to the influence of the industry.
Potassium tetrafluoroaluminate has been popularized well, and the construction of other production lines has been accelerated. In the first half of 2019, the sales volume of potassium fluoroaluminate products was 9000 tons, an increase of 149.6% over the same period last year. It is expected that the company's potassium fluoroaluminate sales will continue to grow in the third quarter, and the potassium tetrafluoroaluminate market will gradually open. In addition, the company's other production lines are also accelerating construction: 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 estimate that the company's 2019-2021 net profit will be 1.5 pound 2.0 billion yuan, corresponding to EPS 0.94 pound 1.25 shock 1.61 yuan per share, corresponding to PE 31.5X/23.8X/18.5X, maintaining the "buy" rating.
Risk hint: aluminum grain refiner grain demand risk, potassium tetrafluoroaluminate expansion is not as expected.