Zhitong Financial APP learned that Tianfeng Securities released a research report that Laike Chemical (01986) is the world's leading manufacturer of dyes, pigments and pesticide intermediates, with a solid leading position and a growing company market. In recent years, the company is actively arranging the lithium battery material business by seizing the opportunity of the rapid growth of new energy vehicles in the next few years.

The organization expects the company's return net profit from 2017 to 2019 to be 115 million, 163 million, 1, 9.5 billion, corresponding to PE34, 24 and 20 times. Give a rating of "overweight".

The global leader of dyes and pigment intermediates, lithium materials are the main growth point.

1. The company is the world's leading supplier of dyes and pigment intermediates, with four major divisions.

Laike Chemical is a Hong Kong main board listed company, the predecessor of Huago Dye was founded in 2007, headquartered in Beijing, as the world's leading manufacturer of dyes, pigments and pesticide intermediates, has the world's largest DSD acid, DMSS production base, the world's three major nitrotoluene production bases, core products occupy the world's top three markets, in recent years is vigorously developing lithium battery cathode material precursor and environmental protection consulting business At present, it has four major divisions: dyes, pigments, pesticides and battery materials.

two。 Revenue increases steadily and profits remain stable

From 2012 to 2017, the company's revenue increased steadily. In 2015, due to the drop in product prices, revenue fell 2.4% compared with the same period last year. In 2017, the company reported that revenue increased by 20% to 607 million yuan.

In recent years, the net profit has remained stable, with a net profit of 58 million yuan reported in 2017.

3. Dye intermediates account for more than 50% of revenue and gross profit

In the first half of 2017, the revenue of dye intermediates was 304 million, accounting for 50%; the revenue of pesticide intermediates was 202 million, accounting for 33.3%; and the revenue of pigment intermediates was 100 million yuan, accounting for 16.6%.

The total gross profit in the first half of 2017 was 156 million, of which dye intermediates accounted for 50.96%, pesticide intermediates accounted for 26.15%, and pigment intermediates accounted for 22.8%.

Dye and pigment intermediates business: the leading position is solid, continue to maintain growth

1. Dye intermediate: DSD acid has more than half of the global market share and has a significant advantage in integration.

DSD acid is the main raw material of OBA, which is mainly used in papermaking, textile and detergent industries. According to the forecast of Frost&Sullivan, the demand for DSD acid will increase steadily from 2016 to 2020, and is expected to reach 65800 tons in 2020. The three producers in the industry have a total market share of 78.5%, and the market is relatively concentrated. In 2016, the production of Lottery Chemical DSD acid accounted for 53% of the global market, ranking first.

At present, the production capacity of Lottery Chemical DSD acid is 35000 tons, with an average price of 17000 yuan per ton in the first half of 2017 and a gross profit margin of 27%. The new production capacity of 20000 tons is expected to be put into production by the end of 2017, and the new capacity will drive the continued growth of DSD acid business.

At present, the company is working hard to break through the DSD acid industry chain. Mononitrotoluene was put into production in 2015. Mononitrotoluene is the main raw material of DSD acid. By 2016, the market share of mononitrotoluene in Lottery Chemical has reached 18.8%, ranking third in the world. It can meet 85% of the company's raw material demand, reduce the cost of raw materials purchased by the company, ensure the stable production of DSD acid, and have obvious competitive advantages in integration. According to the disclosure of the company, the company will continue to expand its business to the downstream OBA of DSD acid in the future, and strive to open up the upstream and downstream of the industrial chain.

two。 Pigment intermediates: DMSS and DMAS lead the world and continue to grow steadily

The company's pigment intermediate products are mainly DMSS and DMAS. The downstream of DMSS is mainly used in automotive coatings, food pigments, pharmaceutical pigments and architectural coatings. Global DMSS consumption is 6600 tons in 2016, and Frost&Sullivan predicts that the future demand will maintain steady growth, and the demand will reach 10300 tons in 2020. In 2016, the global output of Lottery Chemical DMSS accounted for 42.7%, ranking first. As the leader of the industry, DMSS business is expected to continue to grow with the industry in the future.

The downstream of DMAS is mainly used to produce artificial pigment lemon yellow. Benefiting from the stable market demand for food, medicine and cosmetics, the demand for DMAS will rise steadily in the next few years. Frost&Sullivan expects the demand for DMAS to reach 5600 tons in 2020. In 2016, Lottery Chemical DMAS output accounted for 19.8% of the world, ranking second, and will continue to benefit from industry growth in the future.

3. Bind downstream customers, new products continue to be put on the market

Lottery Chemical customers, including BASF, have worked with a number of well-known international chemical companies for more than 10 years. In 2016, the top five customers accounted for 28% of revenue. Once the intermediate products enter the downstream customer supply chain, it is difficult to be easily replaced. In the future, the company will continue to develop new intermediate products, expand the product line horizontally, and ensure market sales with the help of existing channels. Intermediate business is expected to be volume-driven growth.

Lithium materials: seize the opportunity of new energy vehicles, iron phosphate drives performance growth

1. New energy vehicles are the future trend, and the demand for lithium iron phosphate driven by electric buses continues to grow.

Electrification is an important development direction of the automotive industry in the future. Overseas manufacturers represented by Tesla, Inc. lead the industry trend, and international auto giants have launched new energy vehicle strategies one after another, and the market demand for new energy vehicles will maintain rapid growth in the next few years, driving the rapid growth of upstream power battery demand.

According to the technical route, power battery is mainly divided into ternary battery and lithium iron phosphate battery, in which lithium iron phosphate battery is mainly used in new energy bus. From 2017 to 2020, the domestic demand for new energy buses continued to grow, driving the demand for upstream cathode material lithium iron phosphate to continue to grow.

two。 The concentration of lithium iron phosphate cathode material is high, and the iron phosphate process is the mainstream.

The domestic demand for lithium iron phosphate cathode materials was 55000 tons in 2016, and the market share of CR10 reached 86.2%. The market is relatively concentrated. The main manufacturers include BYD (21.6%), Beitri (14.7%), sublimation Technology (11.0%), Peking University first (8.2%), Guoxuan Tech (7.7%) and so on. Since 2012, the price of lithium iron phosphate has declined as a whole, but it has rebounded in 2017. One of the main raw materials of lithium iron phosphate is iron phosphate. Tianfeng judges that the iron phosphate enterprises that can bind downstream customers in the future have great growth potential.

Worldwide, there are four process routes for the production of lithium iron phosphate cathode materials: hydrothermal process, ferrous oxalate process route, iron oxide process route, iron phosphate process route. The main raw materials used in the four process routes are different, of which the iron phosphate process route appears the latest, but from the trend, it is becoming the mainstream process route in China. For example, BYD and Peking University, which have the market share of lithium iron phosphate cathode materials, are mainly using iron phosphate process route. Guoxuan Hi-Tech is also purchasing iron phosphate on a large scale and adopting this process route. In the iron phosphate process, the raw material iron phosphate is very important: 1) the performance of the cathode material is highly dependent on the quality of the iron phosphate raw material, and can not be adjusted accordingly. The moisture content, iron-phosphorus ratio fluctuation, morphology change and particle size distribution of iron phosphate materials will affect the properties of the finished products, so the stability of raw materials iron phosphate is very important.

2) according to the disclosure of lithium electricity, ferric phosphate accounts for more than 50% of the cost of raw materials under this process route. According to Qianxun Consulting data, the domestic production of iron phosphate reached 42000 tons in 2015. Tianfeng expects the market scale of the industry to continue to grow in the future: 1) the demand for downstream lithium iron phosphate cathode materials continues to grow every year; 2) the substitution effect of iron phosphate process routes on other process routes.

3. Lottery chemistry: the production capacity of 15000 tons of iron phosphate will be put into operation soon, contributing to the company's remarkable performance.

The company is building a production capacity of 15000 tons of iron phosphate, which is expected to be put into production by the end of 2017 and more than 1000 tons per month in 2018, when the production capacity is expected to be in the forefront of the industry. The company has reached a supply intention with a number of downstream lithium iron phosphate manufacturers. The unit price of iron phosphate is about 23000 yuan / ton, and the gross profit margin is as high as 30-40%. According to the 30% gross profit margin, it is expected to contribute more than 80 million yuan to listed companies in the future.

Profit forecast and valuation

It is estimated that the company's 2017-2019 return net profit is 115 million, 163 million, 195 million, corresponding to PE34 times, 24 times, 20 times. Give a rating of "overweight".

(editor: Wang Mengyan)