Event: the company achieved 193 million yuan in revenue in the first quarter of 2020, + 15.50% year-on-year, and achieved a net profit of 3.69 million yuan,-37.03%, compared with the same period last year.
The company bucked the trend to achieve revenue growth, operating cash flow continued to improve.
At present, the market demand for automobiles and home appliances in China is still in the doldrums, and the traditional modified plastic industry has been greatly impacted. The company actively develops and launches differentiated materials and carries out epitaxial acquisitions (Deqing Kesai merged in May 2019). Improving the proportion of high-end product structure is the main reason to help the company go up against the trend and achieve revenue growth. The year-on-year decline in the company's parent net profit was mainly affected by equity incentive amortization, a substantial increase in R & D expenses and donations totaling 5.37 million yuan to support the fight against the epidemic. In addition, the company's net operating cash flow turned positive in 2019, and Q1 continued to improve in 2020, + 210.01% compared with the same period last year, mainly due to the optimization of the company's product and customer structure and the improvement of payment recovery capacity. 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.
Be optimistic about the improvement of the profitability of LCP and PTFE.
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.
Chongqing special materials project is the next bright spot 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.
With the help of the epidemic situation, the company turned to expand the production of melt-blown materials in time.
At present, the global epidemic situation is still serious, and the supply of masks falls short of demand. According to the announcement, the company develops and produces special melt-blown material and electret masterbatch for melt-blown nonwovens masks, and the products have been recognized and used by customers. At present, according to customer orders, the company will have a daily production capacity of 200 tons of melt blown material in May through a variety of models, such as production conversion, production expansion, outsourcing and so on, which is expected to contribute to the company's performance.
Investment advice: buy-An investment rating, we expect the company's net profit from 2020 to 2022 to be 0.53,0.61 and 67 million yuan respectively.
Risk hint: the demand is not as expected; the project construction is not as expected.