Brief performance review
On July 11, the company announced its semi-annual performance forecast for 2022. The company's revenue for the first half of 2022 is expected to be 760 million yuan to 780 million yuan, up 0.26%-2.90% year on year. Net profit from return is expected to be 8.5 million yuan to 112 million yuan, down 70.51%-79.11% year on year. Net profit after deducting non-return income is expected to be 6.5 million yuan to 9 million yuan, down 67.32%-76.40% year on year.
Business analysis
The problem of supply cuts in key raw materials has been resolved, and the company's LCP is expected to resume growth in the third quarter. Since the fourth quarter of 2021, due to the impact of the supply of key LCP raw materials from overseas, the company's short-term performance has been under pressure. In order to solve the problem of raw material supply cuts, the company cooperates with upstream domestic suppliers and strives to localize raw materials. Currently, with the restoration of overseas supply channels and the advancement of domestic raw material construction projects, it is expected that the company's LCP sales in the third quarter will continue the growth trend of the first half of last year, continue to increase penetration among downstream customers and expand application scenarios.
The special engineering plastics project at the Chongqing base will be put into operation in an orderly manner in the second half of the year. The company's 20,000-ton LCP resin material project, which began construction at the Chongqing base at the beginning of this year, is expected to be put into operation in August this year. Resolving the raw material problem will help release LCP production capacity. The first phase of the 5,000 ton PPA project, which was put into operation in August last year, has gradually climbed in production capacity this year. Production is expected to increase further in the second half of the year, and the second phase of the 5,000 ton PPA project is also expected to be launched later. With continuous process improvements and completion of the LCP production line, polysulfone and polyaryl ether ketone are also expected to be put into operation in the second half of the year.
Investment advice
Along with the resolution of the raw material supply shortage problem and the expected launch of the 10,000-ton LCP project in August, the company's LCP products are expected to resume rapid growth in the third quarter, helping the company achieve a reversal in performance. At the same time, the rise in production capacity and commissioning of products such as PPA, polysulfone, and polyaryl ether ketone in the second half of the year will also bring increased performance to the company.
Due to the company's low performance base for the first half of the year, we lowered our profit expectations for the whole year. It is predicted that the company's net profit for 2022-2024 will be 1.02, 2.46 million yuan, and 424 million yuan respectively, EPS will be 0.45, 1.09, and 1.87 yuan respectively, and the corresponding PE will be 45.0, 18.7, and 10.9 times, respectively, maintaining “purchases”
ratings.
Risk Reminder
The recovery in the supply of key raw materials fell short of expectations; the release of special engineering plastics fell short of expectations; competition in the industry intensified.