The company released its annual report for 2020, with revenue of 4.422 billion yuan, an increase of 61.67% over the same period last year, and a net profit of 855 million yuan, an increase of 414.51% over the same period last year, slightly exceeding expectations. The company plans to pay a cash dividend of 2 yuan (including tax) for every 10 shares. It is optimistic that the company will continue to innovate and develop in the future and maintain its overweight rating.
Support the main points of rating
Hot sales of meltblown materials lead to the best performance in history. In 2020, the company achieved revenue of 4.422 billion yuan, an increase of 61.67% over the same period last year, and a net profit of 855 million yuan, an increase of 414.51% over the same period last year, slightly exceeding expectations. The epidemic led to a substantial increase in demand for meltblown materials, the company responded quickly and expanded its production capacity, with years of technology accumulation and word-of-mouth to achieve a substantial increase in sales, the company's performance reached a record high, gross profit margin and net profit margin also increased to 27.75% and 19.65% respectively. From a product point of view, the revenue of the core thermoplastic elastomer was 426 million yuan, an increase of 7.79% over the same period last year, and continued steady growth; the modified plastic plate to which melt blown materials belonged achieved revenue of 3.578 billion yuan, an increase of 80.18% over the same period last year.
The changes outside the melt blown material are more to be expected. R & D innovation has always been an important endogenous driving force to support the sustainable development of the company. In 2020, the company cashed in R & D spending as high as 182 million yuan, an increase of 84% over the same period last year. In this context, the company achieved a number of products sales breakthrough. The IMSS technology cooperated by the company and Koteng has obtained the certification of GM Global, Ford, Volvo, Citroen, Pan Asia and other enterprise brands, and the first Buick GL6 equipped with IMSS technology in 2020 has achieved mass production. In terms of modified plastics, the company has successfully issued convertible bonds and plans to add 120000 tons of production capacity in 2021, which will effectively alleviate the problem of insufficient production capacity. Recently, in the case of ensuring the supply of goods to the core customers Haier, Jiuyang, Panasonic, Samsung and other companies, we have newly developed high-quality customers such as XIAOMI, Liren, Mei and Meiling. In addition, the company announced that it will invest in the construction of 120000 tons of biodegradable resin (PBAT) project to further expand its application in the field of new materials.
Valuation
The company is a leader in the domestic thermoplastic elastomer industry, whose products break the monopoly of foreign giants and are expected to benefit from the trend of domestic substitution and industrial upgrading. The new production capacity of several products of the company will be put into production one after another, and the scale is expected to rise to a higher level. Taking into account the price increase of related products, the EPS from 2021 to 2022 is adjusted to 0.96 yuan and 1.09 yuan respectively, corresponding to 22 times and 19 times of PE. Maintain the overweight rating.
Main risks faced by rating
Raw material prices fluctuated unusually sharply; demand growth in downstream industries was lower than expected; market development and new capacity construction fell short of expectations.