The leader of water treatment chemicals, the performance increased by 51% in the first half of the year.
Taihe Technology is one of the largest manufacturers of water treatment chemicals in China, and its main products include scale inhibitors, corrosion inhibitors, bactericides and algaecides, with a production capacity of 265,000 tons per year. The company has a clear positioning and focuses on the production of water treatment chemicals and does not sell products directly to end customers. The products are oriented to the global market, and the proportion of overseas revenue is maintained at 55% all the year round. The net profit of homecoming in the first half of 2020 was 126 million, an increase of 50.69% over the same period last year.
The market of water treatment chemicals is growing steadily, and the demand space is considerable.
Global market: the global market for water treatment pharmaceuticals increased from US $26.85 billion to US $34.46 billion from 2015 to 2018, with a compound growth rate of 8.7%. The market size is expected to reach about 321.3 billion yuan in 2023 and a compound growth rate of 6.2% from 2018 to 2023. In terms of industry structure, industrial / production water treatment and municipal / drinking water treatment are the most important application areas, with a combined market share of 65% in 2023. In terms of geographical structure, the global share of water treatment chemicals is tilted to the Asia-Pacific region, and the market share is expected to reach 34.41% in 2027. Domestic market: the total size of China's water treatment pharmaceutical market was about 25.6 billion yuan in 2017 and is expected to reach 38.2 billion by 2022, with a compound growth rate of about 8.3%, which is faster than the global level. According to the industry structure, the application field of municipal water treatment is growing rapidly, accounting for 36.9% in 2022.
The supply-side international market pattern is stable, the domestic pattern is better under the pressure of environmental protection, the international market participants are mainly multinational corporations, the overall competition pattern is stable, and M & A has gradually become the norm under the background of the decline of endogenous growth momentum. The domestic market pattern is relatively scattered, and there are about 10-20 enterprises with a production capacity of more than 10,000 tons. Under the background of stricter environmental protection standards in recent years, the trend of overall industry concentration is obvious, and the high additional cost brought by environmental protection requirements has increasingly become an important barrier in the industry.
The fund-raising project continues to advance, and the capacity expansion opens the company's growth space for the company's planned production capacity of 916000 tons, including an annual output of 280000 tons of water treatment agent projects and water treatment agent series product projects. among them, the production scale of the water treatment agent series project is an increase of 636000 tons per year, and the profits of the two projects are expected to reach 1.108 billion yuan after delivery. Fund-raising projects PBTCA workshop, spray drying workshop, crystal workshop have been approved for trial production; dichloropropanol workshop, acetic anhydride workshop, tetraacetylethylenediamine workshop are expected to be put into production within 2020. The smooth commissioning of the fund-raising project is expected to solve the bottleneck of the company's existing production capacity, achieve the extension of the industrial chain, and continue to reduce the company's production costs, which will help the company to continue to improve the market share of its products.
Profit forecast and investment suggestion: it is estimated that the return net profit of the company from 2020 to 2022 is 2.63,3.47 and 486 million yuan, the EPS is 1.22,1.60 and 2.25 yuan, and the corresponding PE is 27.2,20.7 and 14.8 times. The performance will grow at a compound growth rate of 40% in the next three years, conservatively giving the PEG target 0.8, that is, the 2021 target PE will be valued at 32 times, with a target price of 51.35 yuan, covering the company for the first time and giving the company a "buy" rating.
Risk hints: the development of the industry is not as expected, the competition in the industry is intensified, the production capacity is not as expected, and the risk of administrative punishment by the CSRC
