Event: in 2019, the company achieved revenue of 2.735 billion yuan (+ 100.76%) and net profit of 166 million yuan (+ 35.75%). The main reason for the performance growth was the consolidation of Haier new materials acquired in November 2018. In 2020, Q1 had revenue of 618 million yuan (- 8.02%) and net profit of 69 million yuan (+ 91.60%), mainly due to a sharp drop in the price of raw materials and an increase in demand for mask meltblown materials.
The modified plastics industry has entered the business cycle, and the convertible bond project has expanded the company's production capacity. We believe that the modified plastics industry is ushering in an inflection point. On the one hand, under the threshold of technology and scale, the market share is concentrated to the leader. On the other hand, the expansion of raw materials and the sharp fall in oil prices in the upper reaches have significantly improved the profitability of the industry. At present, the company goes hand in hand in the two major businesses of modified plastics and thermoplastic elastomers. The company acquires Haier new materials and enters the modified plastics industry chain of Haier Group. in addition, it plans to build a new production capacity of 120,000 tons per year, which will reach 320000 tons, further expanding the operation scale.
Multi-point blooming of elastomer business, process breakthrough in high-end field
The company's elastomer products are high value-added products, including TPV, TPIIR, HNBR and DVA products. TPV is a new type of rubber, which has great application potential in replacing traditional vulcanized rubber, and has been widely used in domestic automobile parts. The company is actively expanding the use of TPV elastomers in new energy vehicles, rail transit, construction engineering and other fields. Special rubber processes such as TPIIR, HNBR and DVA have achieved breakthroughs and have gradually entered the downstream application markets such as medical and automotive tires, and it is expected that they will enter a rapid volume stage in the next two years.
The demand for melt blown materials for masks is strong, and overseas orders are increasing rapidly.
The company is the largest manufacturer of meltblown materials for medical masks in China. At present, the production capacity of melted materials has increased from 1.2 million tons per day at the end of January to about 3.5 million tons. At present, nearly 1000 tons of overseas orders have been received. The company melt blown material can also be used in diapers, thermal insulation materials and other fields, after the epidemic, the company can flexibly adjust the production line according to demand to avoid overcapacity.
Investment advice: give "overweight" rating
We estimate that the company's 2020-2022 net profit will be 3.16xb 412x498 million, a year-on-year growth rate of 90.11xb 30.43pm 20.92%, diluted EPS=0.78/1.01/1.22 yuan per share, and the current share price corresponds to PE=56.4/43.2/35.8 times, maintaining the "overweight" rating.
Risk tips: the impact of the epidemic on downstream demand; the risk of raw material price fluctuations.