Event: (1) the company issued a 2021Q1 performance forecast, which is expected to achieve a net profit of 0.20 billion yuan, compared with the same period last year, + 441.62% earnings 577.03%. (2) the company plans to invest 300 million yuan to build a project with an annual production capacity of 20,000 tons of LCP resin materials in Chongqing.
Q1 performance achieved substantial growth, the rapid release of LCP demand.
2020Q1, affected by the epidemic, China's automobile and home appliance market demand is low, the traditional modified plastics industry has been greatly affected, superimposed by the company's equity incentive amortization, a substantial increase in R & D expenses and other factors, the company's return net profit has been greatly affected in the same period last year. 2021Q1, on the one hand, due to the rapid increase in demand for LCP materials, the company's new production capacity in 2020 has been effectively released, driving the growth of the company's profits; on the other hand, the company's product structure has been optimized, the proportion of high-end products has increased, and the gross profit margin has improved.
The company plans to build 20, 000 tons of LCP, competitiveness is expected to continue to improve.
5G LCP material is relatively high-end and has a wide range of applications, the company pays close attention to the opportunity of import substitution and joint development with customers, and its products are fully recognized by customers in downstream communications and consumer electronics, automotive electronics, electrical and other industries, and the company's LCP material orders are growing rapidly. In order to better meet the needs of customers, the company plans to invest 300 million yuan to build a project with an annual production capacity of 20,000 tons of LCP resin materials in Chongqing. The construction period is from April 2021, and it is planned to be put into production in June 2022. After the completion of the project and the calculation of the company's existing LCP material production capacity, the company will have an annual production capacity of 25000 tons of LCP resin, which can supply the company's annual production capacity of 35000 tons of LCP composite materials and meet the resin material needs of downstream film industry customers. The competitiveness of the company is expected to continue to improve.
Chongqing special materials project is expected to be launched one after another this year.
According to the 2020 annual report, the company's fixed increase project Chongqing Longevity 10,000 tons / year high-performance polyamide and 10,000 tons / year high-performance polysulfone (construction in two phases) is currently smoothly advancing the construction, and plans to gradually put into production related production capacity in 2021, among which PPA has passed the testing and verification work of downstream automotive electronic relay customers and entered the batch supply phase. The company will make use of the location advantage of Chongqing to realize the industrial layout in South China, East China and Southwest China. At the same time, the project products will form coordination with the company's existing special engineering polymer materials to achieve import substitution and improve the company's competitiveness. In addition, the company announced on March 20 a new foreign investment of 525 million yuan to build an annual production capacity of 10000 tons of high-performance new materials, semiconductors and 5G communications equipment in Huzhou. This investment is expected to help the company extend to the downstream industrial chain to meet the product needs of existing and new customers and enhance the competitiveness of fluorine-containing materials in the market.
Investment advice: buy-An investment rating, we expect the company's net profit from 2021 to 2023 to be 1.31,2.04 and 330 million yuan respectively.
Risk tips: the certification and promotion of new materials are not as expected; the construction of the project is not as expected; the demand and price of traditional products are declining.