Event: the company announced its results for the first quarter of 2020. The company expects to achieve a net profit of about 90 million yuan in the first quarter of 2020, an increase of about 181.83% over the same period last year.
The production capacity of the fund-raising project has been gradually released, and the company's performance is in line with expectations. At present, the plant starts normally, and orders at home and abroad are not affected by the epidemic, and the company's fund-raising projects have all been put into production, including 12000 tons of CIT, 500tons of OIT, 2500 tons of fungicide BIT and 7000 tons of intermediate F nitrile. The gradual release of fund-raising and production has greatly increased the company's production and sales scale, while the company's fungicides BIT, MIT and intermediate F nitrile prices rose sharply year on year is the main reason for the company's increased performance.
The prices of intermediate F nitrile and downstream fungicides are strong, and the supply gap in the industry still exists. On the one hand, the company's performance elasticity comes from the price increase of F-nitrile itself, on the other hand, it comes from the price increase of F-nitrile downstream products. All the fund-raising projects of the company have been put into production, BIT has been fully produced, the load of F-nitrile has reached about 80%, and the production and sales volume have increased greatly. at present, the average price of F-nitrile is about 50-60,000 / ton, the BIT price is 20-250000 / ton, the MIT price is about 130000 / ton, and the product price is still strong. At the same time, the barriers to F-nitrile production are relatively high, and we have verified by many aspects of the industry chain. although some manufacturers have got EIA, they are unable to put into production due to environmental protection or technical reasons, and they have shut down production capacity. We expect that it is unlikely to resume production. At present, only 7000 tons of production capacity has been put into production, and the supply gap in the industry still exists.
The future project reserve is rich, fungicide phase III projects and preparation business open room for future growth. The company is actively preparing to build the third phase of isothiazolinone industrial fungicide project, including CIT/MIT12000 tons / year (or MIT 2000 tons / year), isothiazolinone industrial fungicide OIT1200 tons / year (or DCOIT600 tons / year), isothiazolinone industrial fungicide BIT 2500 tons / year, the future new projects will greatly increase the company's performance. At the same time, with integrated costs and technological advantages, the company is expected to enter the field of preparations in the future. the preparation end of industrial fungicides has higher added value of products. at present, the market is mostly occupied by multinational enterprises, with the breakthrough of technology and market channels in the future. the company's profitability is expected to be further improved, which will open the company's future valuation and growth space.
Profit forecast and investment rating: we expect the company's net profit from 2020 to 2022 to be 468, 534, 627 million yuan, EPS 2.51, 2.86, 3.36, and the current share price, corresponding to PE, is two times that of 10-8-7. With the release of F-nitrile and new project capacity, the company's performance is expected to increase significantly in the next few years, continue to recommend.
Risk hint: the production progress of the fund-raising project is not as expected, the new capacity enters to intensify the industry competition, the raw material price fluctuates sharply, the risk of production safety, the risk of exchange rate fluctuation.