Events:
The company issued an annual performance forecast for 2020. the net profit is expected to be 270 million yuan to 310 million yuan, an increase of 167.11% to 206.68% over the same period last year, and an increase of 126.43% to 161.53% after deducting 258 million yuan to 298 million yuan from the same period last year. And set aside 15 million yuan for bad debts in the contract of Guangdong Qihua Chemical Industry.
Main points of investment
The price of butyl sulfur and sulfur both rose, and the performance guidance exceeded market expectations. The 19-year production safety license of Guixi base expired and could not be extended. However, the company's main product pattern is good, there are no domestic competitors, the company's butyl sulfur, thiosulfide and other products load increase at the same time, the price rise is also the main factor of higher-than-expected performance. Judging from the competitive pattern of the company's main products, the boom can be maintained.
Guixi expansion market awareness may be insufficient. The company announced at the beginning of the 20th that it plans to invest 484 million yuan to build a new project in Guixi base. Guixi base currently plans to develop 4000 tons of butyl sulfur, 3000 tons of methanesulfonate and other products with a large tonnage, and the target market is mainly overseas multinational enterprises. at the same time, the company's business has pesticides cut into the field of herbicides, opening the bottleneck of the company's medium-and long-term development.
Ningxia base is worth paying attention to. In order to ensure the double backup of key raw materials, the company went to Ningxia to develop pesticide business, and the Ningxia base is expected to carry the backup function of phosgene derivatives. According to the half-yearly report, Ningxia Base is currently carrying out the optimization demonstration of the technical scheme and the evaluation of the scheme design, as well as communicating with the local government on the three evaluation, land use and other issues.
Profit forecast and investment rating: the company's operating income from 2020 to 2022 is expected to be 2.285 billion yuan, 2.46 billion yuan and 3.023 billion yuan respectively, the net profit returned to the parent is 281 million yuan, 326 million yuan and 420 million yuan respectively, and the EPS is 0.79 yuan, 0.92 yuan and 1.18 yuan respectively. The current stock price corresponds to 11x, 10x and 8x respectively. Maintain a "buy" rating for the company, taking into account the volume of its butyl sulfur products in 2021.
Risk hint: the risk that the expansion progress of Guixi base is not as expected, and the risk of large fluctuations in the prices of products and raw materials.
