Net profit in 2019 increased by 3% compared with the same period last year. 2020Q1 net profit fell 21%.
Qiangli Xincai released its 2019 annual report on April 27. The company achieved revenue of 864 million yuan in 2019, an increase of 16.9% over the same period last year, and a net profit of 151 million yuan, an increase of 2.8% over the same period last year. The performance slightly exceeded the 149 million yuan disclosed by KuaiBao in the previous period. Based on the current share capital of 515 million shares, the corresponding EPS is 0.29 yuan. Of this total, Q4 achieved revenue of 212 million yuan, down 6.2% from the same period last year, and a profit of 20 million yuan, down 41.6% from the same period last year.
The company plans to pay a cash dividend of 0.6 yuan (including tax) for every 10 shares. The company also released its quarterly report for 2020. 2020Q1's revenue was 178 million yuan, down 3.2% from the same period last year, and its net profit was 26 million yuan, down 21.1% from the same period last year, which was within the range of 0.25 to 28 million yuan in the previous forecast. We estimate that the EPS of the company from 2020 to 2022 will be 0.38 USD 0.46 RMB 0.54 respectively, maintaining the "overweight" rating.
Steady growth of main business in 2019
The sales of PCB photoinitiator increased 23% to 1187 tons compared with the same period last year, but the average price decreased 11% to 164,000 yuan / ton, the revenue was 195 million yuan, up 9%, and the gross profit margin decreased 2.0pct to 40.5%. The sales of LCD photoinitiator reached 76 tons, an increase of 4 percent over the same period last year, an average price of 2.6 million yuan per ton, a year-on-year increase of 9 percent, a corresponding revenue of 199 million yuan, an increase of 14 percent, and a gross profit margin of 57.9 percent. Other photoinitiators sold 4726 tons, an increase of 21 percent, and an average price of 54000 yuan per ton, unchanged from the same period last year. The corresponding revenue was 254 million yuan, an increase of 21 percent, and the gross profit margin increased 5.0pct to 40.7 percent. The company's comprehensive gross profit margin fell 0.4pct to 39.6% year-on-year, while sales / management / R & D / financial expense rates increased by 0.3/0.3/0.7/0.6pct to 4.4%, 8.5%, 7.3%, 0.6%, respectively.
Affected by the epidemic, 2020Q1 performance has declined.
Due to the deterioration of the market competition environment and the impact of the epidemic, 2020Q1's revenue declined slightly, and its gross profit margin increased by 0.5pct to 36.8% compared with the same period last year. The company's sales / management / R & D expense rate increased by 0.6/0.2/2.0pct to 4.3%, 9.1% and 6.9% respectively compared with the same period last year, while the financial expense rate decreased by 0.5pct to 0.1% due to foreign exchange earnings. In addition, the company's non-recurrent income in the first quarter was 2.94 million yuan (mainly financial income), compared with 3.88 million yuan in the same period last year.
Build new production capacity of environment-friendly photoinitiator and expand industrial layout
In October 2019, the company announced that it would invest 1.09 billion yuan to build an "annual production capacity of 12000 tons of environment-friendly photoinitiator, 50000 tons of UV-LED high-performance resin and other related raw materials and pilot plant project", and announced in April 2020 that it intends to issue convertible bonds to raise 900 million yuan for the above project construction and supplementary liquidity. The company estimates that the project construction period is 36 months, the investment payback period is 9 years, and the profit after tax is 110 million yuan. After the project is completed and put into production, it will help the company to expand new business growth points.
Maintain the "overweight" rating
Considering that the epidemic affects the construction progress of the company's new project, as well as the subsequent production capacity climbing and releasing performance, we slightly reduce the company's EPS forecast for 2020-2021 to 0.38 EPS 0.46 yuan (the previous value is 0.44 EPS 0.51 yuan), and introduce the forecast of 2022 EPS of 0.54 yuan, combined with the comparable company valuation level (40 times PE in 2020), considering that the company's PCB photoresist has higher technical barriers. Give the company 42-44 times PE in 2020, corresponding to the target price of 15.96-16.72 yuan, to maintain the "overweight" rating.
Risk tips: the risk of core technology secrecy, new business development is not up to expectations.
