Considering that the park has not yet resumed production and the global demand has been affected by the epidemic, we have lowered the company's 2020-22 net profit forecast to RMB 1.01, 355,357 million. Considering the company's leading position in the high-end dye industry, if the park resumes production smoothly, the company's performance and growth are expected to be repaired. Lower the target price to 8 yuan, corresponding to 1.5 times PB in 2020 (the original target price is 14.4 yuan), maintaining the "buy" rating.
The shutdown of the park has a great impact, and the performance remains in the doldrums. Affected by the "3.21" major safety accident in Xiangshui in Yancheng and the trade friction between China and the United States, it is obvious that the production of dyes and dye intermediates has been suspended and limited, and the downstream demand of printing and dyeing enterprises such as textiles and clothing has been frustrated. The production and sales of the company's main products have declined sharply in 19 years, in which the production of dyes and dye intermediates decreased by 65% and 97% respectively, sales decreased by 64% and 73% respectively, pesticide production increased by 5%, and sales decreased by 13%. Despite the rise in product prices, the gross profit margin of the company's main products remained unchanged or declined, and the company achieved revenue of 1.4 billion yuan for the whole year,-32% of the same period last year. Affected by the suspension of production, the impairment loss of the company's assets increased significantly, and the net profit returned to the mother was-200 million yuan,-223% compared with the same period last year.
Park shutdown, the impact of the epidemic, Q1 performance loss, pay attention to the progress of follow-up production. Under the dual influence of environmental protection shutdown and epidemic situation, the downstream demand of the dye industry is very weak, and the company's performance in the first quarter dropped sharply compared with the same period last year, achieving operating income and net profit of 143 million yuan and-75 million yuan respectively, which were-71.59% and-162.78% respectively compared with the same period last year. We believe that the company's follow-up performance repair still needs to pay attention to the resumption of production in Subei Chemical Park.
High-end dyestuff subdivision leader, the industry position is stable. Anthraquinone dyes are high-end products in the variety of dyes, and the average price of the company's main products has long been higher than that of ordinary dyes. Among them, anthraquinone disperse dyes and vat dyes, the company is firmly in the leading position in the industry, with a market share of more than 30%. The stable customer structure and high-end products also lead to the company's gross profit margin in the dye industry.
Limited by the supervision of Anhuan in northern Jiangsu in the short term, we are optimistic about the development and layout of the company in the long term. Although the safety accident in northern Jiangsu had a great impact on the start-up of the company's main production equipment in the short term, affecting the production and marketing level of the company's dyes; in addition, the pesticide assets acquired by the company could not be produced normally, and the company also adjusted its commitment performance. However, the leading position of the dye subdivision industry of the company is stable, and the industrial chain is complete. Once production returns to normal, profitability is still expected to remain at a high level; in addition, the repurchased shares will also be used as equity incentives or employee stock ownership to ensure the stable development of the company for a long time.
Risk factors: the progress of resuming production is not as expected; the demand for products has dropped sharply; and the new production capacity has fallen short of expectations.
Investment suggestion: considering that the current park has not yet resumed production and the global demand is affected by the epidemic, we reduce the company's 2020-22 net profit forecast to 1.01company355,000,357 million yuan (2020Universe 21-year net profit forecast is 554pm 661 million yuan), corresponding to the 2020-22 EPS is 0.18Universe 0.62 yuan respectively. Considering the company's leading position in the high-end dye industry, if the park resumes production smoothly, the company's performance and growth are expected to be repaired. Lower the target price to 8 yuan, corresponding to 1.5 times PB in 2020 (the original target price is 14.4 yuan), maintaining the "buy" rating.