Event description
The company's operating income in the first quarter was 165 million yuan, an increase of 22.0% over the same period last year; the attributable net profit was 35 million yuan, an increase of 1.2% over the same period last year, and non-net profit increased by 0.2% over the same period last year.
Event comment
Income is growing against the trend. The company's revenue rose 22% in the first quarter from a year earlier, which is expected to come mainly from rapid sales growth or rapid volume expansion after the launch of the Moore brand. In the downstream demand of pearlescent materials, the paint industry accounts for the highest demand, we expect the paint industry demand to decline by about 40-50% in the first quarter, so the pearlescent material industry demand decline is more significant. In this context, the company is able to grow against the trend, on the one hand, relying on the domestic low-end brand Moore, the result of low prices to seize the market, on the other hand, affected by the epidemic, the company's export share is the result of a phased increase.
Profitability increased month-on-month. The gross profit margin in the first quarter was 41.4%, compared with 46.7% in the same period last year. The decline was mainly due to the rapid expansion of the Moore brand, which led to a significant increase in the proportion of low-end products. However, the gross profit margin rose 2.2 percentage points compared with the fourth quarter of last year, mainly due to the lower cost of the titanium oxychloride project after it was put into production. The increase in the self-sufficiency rate of raw materials will reduce the purchase of raw materials, so the net cash flow generated by the company's operating activities is 31.27 million yuan, which is significantly better than that of the same period last year. In addition, the company's expense rate during the period was 14.9%, down 4.4% from the same period last year, of which the rates of sales, management, R & D and financial expenses changed to-3.0%, 0.5%,-0.6% and-1.4% respectively. The final attributable net interest rate was 21.4%, down 4.4 percentage points from the same period last year and 3.5 percentage points higher than the previous month.
The project was put into production at a smooth pace. The company's raw materials have been put into production smoothly and new products are under construction. First, the raw material project. After trial production, the company's titanium dichloride project was finally mass produced in the first quarter, which is not only the proof of technological innovation, but also the beginning of cost decline. It is expected that the unit cost will decrease significantly from the second quarter. The second is the new product project, the company's two 100000-ton titanium dioxide projects are scheduled to be put into production in August and December 2020 respectively, and they are already under active construction. The cash payment for the purchase of fixed assets and intangible assets in the first quarter is 110 million yuan, and the project under construction is 130 million yuan.
As the global leader of inorganic effect pigments, it will enter the inorganic pigment market represented by titanium dioxide and iron oxide in 2020, from the market segment to the mainstream market, the company continues to benefit from the dividend of technological innovation: first, high-end pearlescent materials, help to seize overseas leading share; second, raw materials, help to seize market share in homogenization; third, high-end inorganic pigments help to open up new growth space. With the continuous commissioning of raw materials and new product projects, the company is expected to have a net profit of 2.6,5.8 and 960 million yuan in 2020-2022, corresponding to a valuation of 45, 20 and 12 times.
Risk tips: 1. Global demand fell sharply; 2. The company's production capacity is lower than expected.
