Ceramic membrane industry leader, the company's performance increased by 1.5% in 2019 compared with the same period last year. According to the annual report, the company achieved revenue of 494 million yuan (+ 4.56% compared with the same period last year) and net profit of 56 million yuan (+ 1.47% year-on-year) in 2019. The company's overall gross profit margin stabilized, with the company's gross profit margin and net profit margin reaching 40.76% and 11.30% respectively in 2019. In the first quarter of 2020, the operating income was 68 million yuan (year-on-year-16.08%), and the net profit was 8 million yuan (+ 42.62% compared with the same period last year).
The revenue of the overall treatment scheme of membrane integration technology accounts for about 90%, and the trend of large-scale orders appears.
In 2019, the overall processing solution section of the company's membrane integration technology achieved business income of 444 million yuan, an increase of 10.45% over the same period last year, mainly due to the company's continuous development of the market in new areas while maintaining its business advantages in traditional application areas, ensuring the rapid growth of orders. The company has strong membrane research and development strength. By the end of 2019, the company has obtained 67 invention patents, 96 utility model patents and 5 design patents related to ceramic membrane materials and membrane separation technology.
After the IPO ceramic membrane production line is put into operation, the company's long-term ceramic membrane production capacity is expected to double, and issue convertible bonds to help organic membrane production become independent. The company's current ceramic membrane production capacity is 35,000 m2, and it is expected to increase by 38,000 m2 after the IPO project is put into production; 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 cost and realize 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 0.69,0.91 and 1.20 yuan per share respectively, and the latest closing price will be 24.4,18.6 and 14.1 times of PE respectively. The film industry has broad prospects, and the company will quickly occupy the highlands of the industry by relying on capacity expansion and technological advantages. at the same time, the company will actively launch equity incentives to bind senior executives and core backbone interests, and the company's performance is expected to maintain about 30% growth in the next two years. Considering comparable company valuation and performance growth, we give the company a 30-fold PE valuation in 2020, corresponding to 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.
