Main points of investment:
Domestic technology leading LPG deep processing advantage enterprises. The company is mainly engaged in the process research and development, production and sales of organic chemical products based on LPG. In recent years, the company's operating income has shown a steady growth trend. From 2016 to 2019, the company's revenue was 1.975 billion yuan, 2.779 billion yuan, 3.332 billion yuan and 3.161 billion yuan respectively, up 40.73%, 19.92% and-5.13% from 2017 to 2019 compared with the same period last year. The net profit from 2016 to 2019 was 161 million yuan, 147 million yuan, 177 million yuan and 243 million yuan respectively, with year-on-year growth of-8.86%, 20.70% and 36.82% in 2017-2019. The gross profit margins of the company's products in 2016-2019 were 21.38%, 14.39%, 15.34% and 19.75%, respectively.
Downstream demand continues to grow, driving the development of LPG deep processing industry. The downstream of isooctane, MTBE and other products are mainly used to produce finished gasoline. The development of the automobile industry, the growth of car ownership and the change of gasoline price will directly affect its market demand and price. At present, the demand for isooctane and MTBE continues to increase due to the growth of gasoline production and quality upgrading in various countries. In recent years, the production capacity of isooctane and MTBE in China has continued to increase, but the overall operating rate is low, and the output has increased steadily. In 2018, the production capacity of isooctane and MTBE was 18.15 million tons and 21.23 million tons respectively, up 23.00% and 3.51% over the same period last year, and the output reached 9.6195 million tons and 12.0844 million tons, up 8.68% and 3.68% respectively.
The sales volume of the main products keeps growing, and the price of LPG affects profitability. The company's main business income mainly comes from the sales of isooctane, MTBE, SBAC and other products. From 2016 to 2019, the company's main business income was 1.537 billion yuan, 2.22 billion yuan, 2.625 billion yuan and 2.655 billion yuan respectively, accounting for 77.87%, 79.88%, 78.78% and 84.00% of operating income, respectively. Isooctane and MTBE prices continued to rise in 2017-2018, but international oil prices rebounded in the second half of 2017. domestic LPG demand increased significantly in the fourth quarter, and the sharp rise in prices led to cost increases, while product prices failed to keep pace with changes, resulting in a significant narrowing of isooctane and MTBE profits in 2016-2018.
Fund-raising projects improve the LPG deep processing industry chain and bring new profit growth points. The company IPO intends to raise funds to invest in the "150,000 tons / year maleic anhydride project" and "supplementary working capital". The implementation of the fund-raising project will further improve the circular economy industrial chain of the company's LPG deep processing, enrich the product structure, reduce production costs, and enhance profitability and anti-risk ability. According to the prospectus (application draft), it is estimated that after the project reaches production, in the normal operating year, the annual sales income will be increased by 1.584 billion yuan, and the annual net profit is expected to be 196 million yuan.
Profit forecast and valuation range. We estimate that the return net profit of the company from 2020 to 2022 is 2600.303max 345 million yuan respectively, and the corresponding EPS is 2.30Universe 3.05. considering that the company is a new stock, we give a certain valuation premium to the company in 2020. we give the company 16-20 times PE in 2020, corresponding to a reasonable value range of 36.8-46.0 yuan.
Risk hint. The risk of raw material price fluctuation, the risk of unstable market demand, and the lower-than-expected risk of new projects.
