The company is the leader of water treatment pharmaceutical industry. Taihe Technology is a professional manufacturer of large-scale water treatment pharmaceuticals integrating research and development, production and sales. After years of development, the company has become one of the water treatment pharmaceutical manufacturers with the largest production scale and the most complete varieties and specifications in China. The company has a rich product line, including scale and corrosion inhibitor, scale inhibitor and dispersant, germicidal agent, chelating agent, slime stripping agent, cleaning pre-film agent, osmotic scale inhibitor, cleaning agent, fungicide and so on.
High profit growth in the first half of 2020. Since 2012, the company's operating income has increased from 554 million yuan to 1.245 billion yuan in 2019, with a compound growth rate of 12.3%, and its net profit has increased from 42 million yuan to 172 million yuan in 2019, with a compound growth rate of 22.3%. In 2019, the company's operating income was basically the same as the same period last year, but due to the rise in fuel costs and staff salaries and bonuses, and the decline in the price of superimposed products, the net profit fell 7.8% compared with the same period last year. In the first half of 2020, the company sold 117700 tons of water treatment, with an operating income of 778 million yuan, an increase of 43.05% over the same period last year, and a net profit of 126 million yuan, an increase of 50.69% over the same period last year.
The growth rate of the water treatment industry is steady. Chemical water treatment technology refers to the use of chemicals to eliminate and prevent scaling, corrosion, bacteria and algae breeding and water quality purification technology, which is currently recognized as the most widely used effective means of industrial water saving at home and abroad. According to BCCResearch, the global market for water treatment pharmaceuticals grew from $26.85 billion in 2015 to $34.46 billion in 2018 and is expected to reach $46.56 billion in 2023. Industrial / production water treatment, municipal / drinking water treatment, sewage / wastewater treatment and seawater desalination are the main downstream sectors, with market sizes of $11.675 billion and 102 respectively.
5 billion dollars, 8.005 billion dollars and 4.53 billion dollars. The company's existing products are mainly aimed at the slow-release scale inhibition market in industrial / production water treatment, with a total market space of US $3.74 billion.
Research and development drives the growth of the company. The company's R & D expenditure increased from 20 million yuan in 2012 to 47 million yuan in 2019, accounting for more than 3.5% of revenue. Through long-term research and development, the company has obvious advantages in the field of water treatment. HEDP uses continuous process, the new process increases the input-output ratio, and the unit material consumption is reduced by about 10%. At the same time, the new process also has obvious advantages over the traditional intermittent process in terms of product stability and environmental protection. In the production of polymer, the company improves the yield and quality of the product, reduces the energy consumption of the product, reduces the emission of volatile organic compounds, and realizes the green synthesis of the product through the technology of aqueous organic synthesis without using organic solvent.
The production capacity of water treatment agents continues to increase, and new projects expand to the blue ocean of fine chemicals. The company went public in November 2019, raising 844 million yuan for 280000 tons of water treatment agent projects, water treatment agent series products projects, R & D center construction and supplementary liquidity. The total planned production capacity of the fund-raising project is 916000 tons. In addition, the company also announced that it plans to use its own funds of 360 million yuan to build a water treatment industry chain expansion project. The new project will promote the company's long-term growth in two ways: 1) to expand production capacity and expand market share, while adding various green water treatment agents and granulation capacity to meet the needs of different customers 2) Acetyl chloride, hydrochloric acid and other by-products will be produced in the production of the company's existing products, which will cause certain bottlenecks to the actual production and low added value of the products. Through long-term R & D investment, the company develops and reserves the process technology of producing a series of downstream fine chemicals using all kinds of by-products as raw materials, and these products are mainly faced with specific market segments, avoiding the fierce competition brought by bulk products. Through the construction of the new project, the company will expand its production capacity to the blue ocean of fine chemicals at the same time, and its profitability is expected to climb another high-rise building.
Profit forecast. It is predicted that the net profit of the company from 2020 to 2022 is 240 million yuan, 313 million yuan and 431 million yuan respectively, and the EPS is 1.11,1.45,1.99yuan respectively, corresponding to the PE of 28.7max 22.0max 16.0X.
For the first time, coverage gives a "buy" rating.
Risk reminder event: new project construction is not as expected, safety and environmental protection risk
