The company's first-half performance increased by 67% compared with the same period last year, mainly due to a significant increase in other income. The company released a semi-annual report for 2020, with revenue of 172 million yuan (+ 7.94% compared with the same period last year) and net profit of 21 million yuan (+ 67.03%) in the first half of 2020, of which 18 million yuan was subsidized by the government to thicken the current performance (only 3.73 million yuan in the same period last year). By optimizing the business model, the company's expenses during the period fell by 1.94 pct compared with the same period last year, and the gross profit margin remained above 40%.
The revenue of the overall treatment scheme of membrane integrated technology accounts for about 89.41%, and the R & D strength of membrane technology is strong.
In the first half of 2020, the company's overall treatment plan of membrane integration technology achieved a business income of 154 million yuan, an increase of 16.17% over the same period last year. The company continues to open up new market orders. The company's membrane research and development strength is strong. By the end of the first half of 2020, the company has obtained 66 invention patents, 97 utility model patents and 5 design patents related to ceramic membrane materials and membrane separation technology.
IPO ceramic membrane production line is expected to help double production capacity, the issuance of convertible bonds to help organic film production autonomy. By the end of 2019, the company's ceramic membrane production capacity is 35,000 m2, and it is expected that the IPO project will increase by 38,000 m2 after it is put into production. By the end of June 2020, the investment progress of the project will be 99.17%. In addition, the company has issued 254 million convertible bonds for the construction of organic membrane production line, which is expected to effectively reduce the company's production costs and achieve production autonomy.
Ceramic membrane leading position is significant, production capacity increases to help scale expansion, maintain the "buy" rating. It is estimated that the EPS of the company from 2020 to 2022 will be 0.69 Universe 1.20 yuan per share respectively, and the latest closing price corresponding to PE is 16.69 times higher than that of 29.02 Universe 22.09 Plus. The film industry has broad prospects, and the company is expected to quickly occupy the highlands of the industry by relying on capacity expansion and technological advantages. The company is expected to maintain about 30% growth in the next two years. Considering comparable company valuation and performance growth, we value 30 times PE in 2020, corresponding to a reasonable value of 20.68 yuan per share, and maintain a "buy" rating.
Risk hint. The progress of the project is not as expected, the sales volume of membrane equipment is not as expected, the price drops significantly, the expansion of downstream areas is not as expected, and the macroeconomic downward demand is weak.
