Company announcement semi-annual report 2020: in the first half of 2020, the company realized operating income of 2.275 billion yuan, net profit attributable to shareholders of listed companies of 585 million yuan, and net profit of 575 million yuan after deducting non-recurring profits and losses belonging to shareholders of listed companies, an increase of 75.16% and 670.64% respectively over the same period last year.
In the first half of the year, the company actively expanded the production of polypropylene melt-blown special materials and achieved explosive growth, while other modified plastics and color masterbatch products maintained stable development.
The company greatly expanded the production of polypropylene melt blown material, increased operating income, enhanced social benefits and brand reputation. In the past 20 years, the company has ploughed the melt-blown products, maintained the competitive advantage and the leading position in the industry, and accumulated excellent customers such as Teda and Xinlong. In the first half of this year, the company increased the supply of melt blown material through the transformation of existing production equipment and the expansion of production capacity, which increased from 120t / d in February this year to 1200 t / d. At the same time, the company actively avoids price speculation in a special period and adopts a lock-in long-term sales strategy to stabilize the procurement inconvenience caused by short-term price fluctuations. By the end of the report, the company's contract liabilities are scheduled to be as high as 535 million yuan. The company has also won a good reputation and brand awareness in the industry, and made great breakthroughs in the expansion of new customers and key customers by taking advantage of the growth of the medical and sanitary materials market.
Affected by the launch of new products and falling prices of upstream raw materials, gross profit margin rose sharply in the first half of the year compared with the same period last year (22.45PCT). According to the product type: (1) the thermoplastic elastomer category was affected by the downstream automobile industry, and its revenue fell 7.02% compared with the same period last year, but the gross profit margin increased 21.42PCT compared with the same period last year. We think it may be affected by the double impact of the launch of new products and the decline in the price of raw materials. (2) the income of modified plastics increased by 106.18% compared with the same period last year, and the gross profit margin increased by 26.23PCT compared with the same period last year, which we think is mainly due to the explosive growth in the volume and price of polypropylene melt blown materials. (3) the revenue of color masterbatch increased by 19.38% compared with the same period last year, and the gross profit margin increased by 4.41PCT compared with the same period last year. Through the deep development of old customers, focusing on the development of new materials such as chemical fiber masterbatch, black masterbatch and degradable masterbatch, the sales of color masterbatch have increased steadily.
The overall cost rate has declined slightly during the overall period. The overall expense rate fell 0.17PCT to 8.27% year-on-year.
From a split point of view, the sales expense rate and financial expense rate decreased compared with the same period last year, while the management expense rate and R & D expense rate increased compared with the same period last year. We believe that the company's business is mainly driven by meltblown materials in the first half of the year, and the market is in short supply, so the sales expense rate is low and is expected to increase in the second half of the year. The company is in a period of expansion, and we expect the overall expense rate to remain in a steady and slightly upward trend.
Research and development investment continues to increase, biodegradable materials add new attractions. We believe that the company is good at the research and development of new materials, and product innovation is the core competence that drives the company's medium-and long-term development. In the first half of 2020, the company increased its R & D investment against the trend, and the R & D expenditure increased by 103.59% compared with the same period last year, with a scale of 77.5889 million yuan. In the first half of the year, the company developed new projects such as waterproof roll materials, breathable film special materials, biodegradable materials, PPS special engineering plastics, a full range of anti-abnormal noise products, blow molding / suction grade high melt strength ABS and so on. Under the background of more and more attention to plastic pollution control, we expect biodegradable materials to become another driving force for the growth of the company.
The impairment increased compared with the same period last year, and the performance of Han Dawn improved significantly. From other subjects that affect operating profit: (1) in the first half of the year, Han Dawn's income and net profit increased significantly compared with the same period last year, and the company's net investment income totaled 15.2919 million yuan. (2) the change of fair value will increase the operating profit of the company by 3.7769 million yuan. (3) the loss of asset impairment was reduced by 72.08 billion yuan in operating profit. (4) the benefit supply of enterprises generated by government subsidies is 9.1089 million yuan, which continues to grow.
The company has ample cash flow and continues to expand its input capacity. As of the semi-annual report of 2020, the company's paper cash and transactional financial products (mainly financial products) totaled 966 million yuan, while interest-bearing liabilities were only 84 million yuan. In the first half of the year, the company had a net inflow of operating cash of 1.241 billion yuan, while the company issued convertible bonds of 360 million yuan in July. Abundant cash flow provides a solid foundation for the company's future capacity expansion, R & D investment and extension development. In the first half of the year, the company maintained a positive capacity expansion, and the book value of fixed assets and projects under construction increased by 104 million yuan compared with the 2019 annual report. Currently under construction projects include: convertible bond investment of 120000 tons of modified plastic production capacity, TPV expansion project, TPIIR capacity construction and so on.
Outlook for the company's future performance: we predict that the company's products will benefit from a decline in raw material prices and a historically high gross profit margin; the automotive industry is expected to come out of the trough and begin to improve, which will drive TPV product shipments back to the fast track; polypropylene melt blown materials may face volume price decline; TPU and degradable materials may gradually enter the release period with market development; new products HNBR and TPIIR may harvest orders. In the long run, we believe that the company belongs to the new material technology platform company, with high technical barriers, solid and advanced research and development level, and the product category is expected to continue to expand horizontally, driving the company's performance to improve for a long time.
Profit forecast and investment rating: the company's EPS from 2020 to 2022 is expected to be 2.21,1.27,1.52 yuan respectively. Due to the high performance of the company affected by the explosion of meltblown materials in 2020, but it is expected that the demand for meltblown materials will decline somewhat, so with reference to the average forecast PE of companies in the same industry in 2021, we think that the company has strong new product development capability and good growth, and give the 2021 forecast PE22-27 times, corresponding to the reasonable value range of 27.94-34.29 yuan, given a "better than the market" rating.
Risk hints: the price of raw materials is rising; the volume and price of polypropylene melt blown material is falling; the downstream market development is not up to expectations; there is uncertainty in the development of new technology.