Main points of investment:
Leather polyurethane industry leading enterprises. The company is a leading enterprise in the field of leather polyurethane subdivision, and its main products are leather polyurethane, polyurethane elastomer solution and polyester polyol. It currently has a production capacity of 1450 million tons per year, and the capacity utilization rate is as high as 99.8%. The company takes customer demand as the core, attaches importance to technological innovation and product research and development, continuously optimizes the production process, and realizes product customization and differentiation. In 2019, the company achieved operating income of 1.44 billion yuan and net profit of 132 million yuan, an increase of 14.5% over the same period last year.
Leading enterprises counter-cyclical expansion of capacity, industry concentration is expected to increase. The production capacity of the leather polyurethane industry increased from 1.7 million tons in 2008 to 3.96 million tons in 2019. In the past three years, due to the slowdown in downstream demand and the expansion of production by leading enterprises, the operating rate of the industry has dropped from 60% to 43%.
In the next few years, leading enterprises still have production capacity plans, the living space of small and medium-sized enterprises is squeezed, industry concentration is expected to increase, with the gradual clearance of small capacity, the industry is expected to return to the business cycle.
The fund-raising project is about to be put into production to solve the problem of capacity bottleneck. The 180000 tons of polyurethane resin and its modification project raised by the company will soon be put into production, which will help to solve the capacity bottleneck encountered by the company and increase the company's market share. In addition, the project also includes an annual production capacity of 10,000 tons of waterborne polyurethane and 50,000 tons of thermoplastic polyurethane elastomers (TPU), making the company's product range functional and green, helping to improve the gross profit margin of the products.
Profit forecast and investment rating: the company has the advantage of scale and is expected to benefit from the increase in industry concentration. The EPS of the company is expected to be 1.29,1.73 and 2.29 yuan per share respectively from 2020 to 2022. Coverage for the first time, giving a "overweight" rating.
Risk hints: downstream demand is lower than expected; production safety risk; R & D progress is not as expected; the company's new capacity releases the uncertainty of progress.
