Event: the company issued a semi-annual performance forecast for 2020, with an estimated net profit of 45 million yuan to 60 million yuan from January to June 2020, an increase of 43.83% to 91.77% over the same period last year.
The recovery of downstream construction led to a substantial increase in 2020Q2 performance: affected by the epidemic of COVID-19, the company's operating performance declined to a certain extent in the first quarter of 2020. With the effective control of the domestic epidemic situation in the second quarter, the warming of downstream construction projects led to a rapid rebound in the company's demand for building sealants and orders. The company seized the opportunity of industry development and increased its market share. In addition, benefiting from the development trend of stricter environmental supervision in the coating industry, the company's water-based coating products maintain rapid growth in industrial anti-corrosion fields such as steel structure and petrochemical equipment, which has a positive impact on the company's overall performance in the first half of 2020.
The trend of real estate collection has formed, and the company has benefited as a sealant head enterprise: the company's silicone sealant products are located in the middle and high end market, and it is announced that among the top 100 real estate enterprises in the country, they have successfully entered the brand library of 90 large real estate enterprises. Including Vanke Real Estate, Agile Real Estate, Evergrande Real Estate, Country Garden Holdings, etc., it has been rated as the top three preferred suppliers of sealants for the top 500 real estate development enterprises for six consecutive years. At the same time, it has established long-term cooperative relations with domestic well-known door, window and curtain wall manufacturing enterprises, such as Guangtian Fangte, Fangda Group, Golden Mantis, Sanxin Curtain Wall and so on. In recent years, the concentration of real estate enterprises continues to improve, large-scale enterprises collect a large amount, coupled with the fine decoration policy to strengthen the real estate collection space, the market channels and resources of various categories continue to gather to the first-tier brands. The company Antai construction glue has won the top ten preferred brands of construction adhesive for 15 years in a row, and the market share of sealants for construction engineering has steadily increased by obtaining more brand designation from large real estate groups.
The continuous layout of new production capacity is expected to double its performance volume: the company is mainly engaged in sealants and paints. In 2019, it acquired Zhaoshun technology to expand into the field of electronic glue, and its business expanded to emerging fields such as LED drive power, new energy vehicles, electronics and electricity, and the products have entered the supply system of many large customers such as BYD. According to the announcement, the company's total product sales in 2019 are 75000 tons. In February 2020, the company announced that it planned to raise 360 million yuan in a non-public offering for projects with an annual output of 80000 tons of neutral silicone sealant and 30000 tons of modified silicone sealant, 15000 tons of two-component silicone rubber and 8000 tons of vinyl silicone oil to alleviate production bottlenecks, expand market share and expand emerging markets. The company expects that the two major projects will achieve net profits of 100 million yuan and 22 million yuan respectively. After putting into production, the company is expected to double its performance and have a lot of room for growth.
Investment suggestion: the company's net profit from 2020 to 2022 is expected to be 120 million, 150 million and 220 million yuan respectively, corresponding to 17, 13 and 9 times of PE, maintaining the buy-A rating.
Risk hint: the project construction progress is not as expected, the downstream demand is not as expected, and so on.
