Event: in 2019, the company realized income of 900 million yuan, year-on-year + 11.38%, net profit of 47.33 million yuan, + 35.05%, and deduction of non-return net profit of 18.41 million yuan,-33.00%. The company plans to pay a cash dividend of 0.8 yuan (including tax) for every 10 shares.
The company expands the sales of new materials to effectively make up for the decline of traditional modified plastics.
In 2019, the demand of China's automobile and home appliance market was in the doldrums, and the traditional modified plastics industry was greatly impacted. The revenue of the company's modified general plastics sector fell by 6.85%. However, the company actively develops and launches differentiated materials, carries out epitaxial acquisitions, and enhances the proportion of high-end product structure, which is the main reason for the company to go against the trend and achieve a double increase in revenue performance: from the data disclosed by the company and our split, it can be inferred that the company's engineering plastic alloy business income is 472 million yuan, year-on-year + 20.85%, mainly due to the substantial increase in LCP sales (Walter Special's business income is 60.17 million yuan in 2019. Year-on-year growth of 106.57%) and PTFE (German Qingke Competition and Table, income of 93.03 million yuan in 2019). In addition, the decline in non-net profit deducted by the company compared with the same period last year is mainly affected by equity incentive amortization, payment of M & An intermediary fees, pre-investment in Chongqing project and bad debt calculation of acceptance bills and other expenses totaling 14.24 million yuan.
The profitability of LCP and PTFE has improved, and the company's operating cash flow has improved significantly.
In 2019, Walter Special, as the main body of the company's LCP R & D and production, achieved a net profit of 710000 yuan and turned a profit (losses of 944 yuan and 5.61 million yuan respectively in 2017-2018). The company acquired a net profit of 9.46 million yuan and the net interest rate of PTFE increased to 10% (2017-2018%, respectively). We believe that this is due to the significant increase in the company's LCP production load and the volume of PTFE. 5G uses LCP and PTFE materials at the high end and has a wide range of applications. The company will seize the opportunity of import substitution and jointly develop with customers. Product sales will benefit from growth, and profitability is expected to continue to improve. In addition, the company's net operating cash flow has also improved significantly this year, turning losses into positive ones, mainly due to the optimization of the company's product and customer structure and the improvement of the ability to recover goods. From this we can see that the company is constantly optimizing management and control, and high-end products of high customer recognition, is the leader of domestic subdivision products.
Chongqing special materials project is the next point of the company.
The company plans to invest 500 million yuan to build 10, 000 tons / year high-performance polyamide and 10, 000 tons / year high-performance polysulfone products in Chongqing, with a construction period of two years. On the one hand, the company can make use of the location advantage of Chongqing to realize the industrial layout in South China, East China and Southwest China; on the other hand, the project products will form coordination with the company's existing special engineering polymer materials to achieve import substitution and improve the company's competitiveness.
Investment suggestion: buy-An investment rating, we expect the company's net profit from 2020 to 2022 to be 0.54,0.62 and 68 million yuan respectively.
Risk tips: a sharp decline in prices; a decline in downstream demand; project construction is not as expected.