Analysis and judgment
POF product structure continues to improve, high value-added POF cross-linking membrane gross profit margin steadily improve the company's main products are POF heat-shrinkable film, can be subdivided into POF ordinary film, POF cross-linked film, POF high-performance film 3 categories 8 series, is the first in the country, the second POF production enterprises in the world. From 2017 to 2019, the operating income of the company's POF business segment increased from 590 million yuan to 820 million yuan, with an average annual compound growth rate of 17.6%, and gross profit margin increased from 35.8% to 39.7%. In recent years, the company has continued to optimize the POF product structure and focus on the development of high value-added POF cross-linking membranes. The proportion of revenue from 2010-2020H1 POF cross-linked films in the POF plate has increased from 20.5% to 54.5%, the gross margin in the POF sector has increased from 27.9% to 81.5%, and the gross profit margin has steadily increased from 46.3% to 56.2%. In addition, the company is building 3000 tons of high barrier PVDC heat shrinkable film and 3000 tons of EVOH thermal insulation shrink film project. In the future, the company will continue to optimize the product structure of POF plate to high value-added high-end products.
The gross profit rate of thermoplastic elastomers is expected to become a new profit growth point of the company, the holding subsidiary of the company is mainly engaged in the research and development, production and sales of thermoplastic elastomers, the main products are styrene thermoplastic elastomers and their modified products. The company's thermoplastic elastomers began to expand in 2018, and the sector's revenue increased to 408 million yuan from 16 million yuan in 2017. As the company currently produces and sells basic ordinary products such as SBS, the difference between the comprehensive production cost and the product price is small, coupled with management expenses and financial expenses and other factors, resulting in the sector has not yet achieved profitability. In the first half of 2020, the gross profit margin of the thermoplastic elastomer plate turned positive for the first time to 2.3%, and the loss was decreasing. It is expected that the thermoplastic elastomer plate will begin to make a profit gradually, which will contribute new performance increments to the company.
Optical fiber ointment successfully achieved mass production with SEP, breaking foreign monopoly will realize import substitution on February 28, the company announced the "styrene elastomer SEP for optical cable ointment" developed by its holding subsidiary Zhongli synthetic materials.
Through the identification of the expert group and the certification of scientific and technological achievements, SEP products for optical fiber ointment have been successfully mass-produced and supplied in bulk to downstream enterprises. SEP for optical fiber ointment can be used for optical communication fiber and cable protection ointment material, and it is one of the key materials of 5G communication network. Because of high technical barriers, it has been monopolized by international giants such as Coten of the United States and Colerie of Japan. If the company breaks through the technical bottleneck and foreign monopoly, it will realize import substitution. In the future, with the advance of 5G construction at home and abroad, the demand for optical fiber and cable ointment is expected to show explosive growth.
II. Investment suggestions
It is estimated that the company will earn 0.16,0.24 and 0.35 yuan per share from 2020 to 2022, with corresponding PE of 46,31 and 21 times respectively.
With reference to the current average 47 times PE level of CS membrane material plate, considering that the company's thermoplastic elastomer plate will usher in an operating inflection point, it is expected to become a new performance growth point of the company, covering it for the first time and giving it a "recommended" rating.
Third, risk tips:
The risk of product price fluctuation; the construction progress of 5G base station is not as expected.