Event: 1. Zhongxin fluorine materials disclosed its 2019 annual report that the company's revenue in 2019 was 709 million yuan, an increase of 61.51% over the same period last year; the net profit was-54.6973 million yuan, down 251.28% from the same period last year; and the net profit after deducting it was-201 million yuan, down 785.30% from the same period last year. Operating net cash flow was 104 million yuan, an increase of 196.55% over the same period last year. two。 The company disclosed that its revenue in the first quarter of 2020 was 200 million yuan, an increase of 65.85 percent over the same period last year. The net profit returned to its mother was 8.1206 million yuan, an increase of 29.15 percent over the same period last year, and the net profit after deducting 6.2254 million yuan was 9.22 percent higher than the same period last year.
Comments: 1. The performance in 2019 is mainly affected by goodwill. The company's merger and acquisition of Gaobao Mining has been completed, and the company's revenue has increased since September. The company's net profit was negative, the price of anhydrous hydrogen fluoride, the main product of Gaobao Mining, declined, and the performance commitment was not fulfilled. The company calculated 253 million yuan of goodwill impairment resulting in negative net profit in 2019. In terms of products, pharmaceutical and chemical products were affected by the price of raw materials, and the gross profit margin fell 42.5pct to 12.8% compared with the same period last year; pesticide chemical products were affected by the outbreak of Spodoptera litura, and the demand for the company's related products increased by 191.2% and 180.5% respectively compared with the same period last year. Revenue from new materials and electronic chemicals increased by 84.6% year-on-year, and gross profit margin fell 18.4pct to 27.0% year-on-year.
two。 Hit by the epidemic, the first quarter was slightly lower than expected. Affected by the epidemic, the company gradually resumed work after the Spring Festival, affecting the company's revenue and profits, and the first-quarter performance was slightly lower than expected. Considering that the impact of the epidemic on the economy has gradually receded, the company's revenue and profits are expected to recover gradually.
3. Open the whole industry chain of fluorite-hydrogen fluoride-fine chemicals and promote the medium-and long-term development of the company: in 2019, the company acquired Gaobao Mining, a producer of anhydrous hydrogen fluoride, and its subsidiary Gaobao Mining acquired Changxing fluorite. Successfully opened up the fluorite-hydrogen fluoride-downstream fine chemicals industry, successfully made up for the company's shortcomings in the upstream of fluorine chemical industry. Relying on the advantage of upstream hydrogen fluoride resources, the company will launch the first phase of the construction of fluorobenzene and other series of fluoride products in May to help the company's medium-and long-term development.
Profit forecast and investment advice: under the impact of the epidemic, the prices of some products have fallen, affecting the company's performance, the company's fluorite-hydrogen fluoride-downstream fine chemicals industry chain is perfect, the company's medium-and long-term growth is obvious. We downgrade the 20-21 profit forecast and increase the 22-year profit forecast. We expect the net profit for 20-22 years to be 1.22 pounds 1.53 pounds, and the EPS for 0.86 pounds 1.88 pounds 1.33 yuan. The current share price is 27 times PE in 20 years, downgrading to "overweight" rating.
Risk tips: safe production, falling product prices, goodwill provision, COVID-19 epidemic situation, weaker downstream demand, raw material price fluctuations, environmental protection risks, M & A uncertainty risks.