Event: the company announced the 2019 annual report, achieving operating income of 13.02 billion yuan, + 15.71% year-on-year; net profit of 419 million yuan,-35.66%, deducting 363 million yuan,-44.06%.
The revenue of single Q4 is 3.24 billion yuan, the net profit of return to the mother is 355.3 billion yuan, and the deduction is-16.51 million yuan.
The prosperity of nylon chemical industry declined, and the profitability of chemical fiber weaving remained stable: during the reporting period, the average selling price of nylon 66 slices decreased by 21.30% to 20842 yuan / ton, the average purchase price of nylon 66 salt increased by 11.98% to 15558 yuan / ton compared with the same period last year, and the gross profit margin of nylon chemical business decreased by 13.62pct to 17.93% compared with the same period last year. The profitability of the chemical fiber weaving business remained stable year-on-year, with gross profit margin rising 0.42pct to 13.57 per cent and the company's comprehensive gross margin falling 5.21pct to 8.96 per cent year-on-year.
During the reporting period, the holding subsidiary Shenma Engineering Plastics Co., Ltd. achieved a net profit of 157 million yuan, and the holding subsidiary Shenma Nylon Chemical achieved a net profit of 474 million yuan.
Promote the equity acquisition of nylon chemical industry, layout PC and BOPA business: in October 2019, the company announced that it intends to purchase 37.72% of the shares of nylon chemical company by issuing shares and paying cash. After the completion of the transaction, the company will realize the holding of nylon chemical industry and realize the integration of the whole industry chain of adipic acid, hexanediamine and nylon 66 salt in the upper reaches of nylon 66. In September 2019, the company announced that it had been transferred to the 15% equity of Shenma Polycarbon material Company held by Changzhou Jieming to subscribe to the investment right to build the Shenma carbon Phase I PC project. The company is involved in PC engineering plastics and is expected to promote the adjustment of products and industrial structure. In addition, in December 2019, the company announced its intention to set up a wholly-owned subsidiary Henan Pingmei Shenma Nylon material (Suiping) Co., Ltd. and invested in the construction of 25000 tons of BOPA project, through which the company will set foot in the field of high-end nylon packaging materials and consolidate its dominant position in the nylon industry.
The project under construction continues to advance: the first phase of Shenma cord fabric with an annual output of 40,000 tons of nylon 66 differential industrial silk has been completed and put into production in September 2019; the first phase of Shenma nylon 6 civil silk project has been completed and put into production in March 2020; Zhongping Shenma Jiangsu New material Technology Co., Ltd. annual output of 30,000 tons of nylon 66 chip project has been mechanically completed.
Profit forecast and investment rating: maintain profit forecast for 2020-2021 and add profit forecast for 2022. EPS is expected to be 0.94,1.11 and 1.45 yuan respectively, corresponding to the latest closing price PE is 9 times, 7 times and 6 times. Although the downturn in demand in terminal industries such as automobiles is difficult to improve in the short term, the advantages of the whole industry chain will gradually appear after the company completes the acquisition of 37.72% stake in Nylon Chemical Industry. After the completion of the project under construction, the company's product structure is expected to be optimized, still maintaining the "overweight" rating.
Risk hint: the price strategy of overseas giants has changed; the tight supply of adipic nitrile affects production.