Core ideas:
The company released the 2020 annual report, Q4 performance reached an all-time high. Over the past 20 years, the company achieved revenue of 2.005 billion yuan, an increase of 1.21% over the same period last year, a net profit of 260 million yuan, an increase of 14.25% over the same period last year, and a non-return net profit of 235 million yuan, an increase of 11.35% over the same period last year. In a single quarter, the company's 20Q4 achieved revenue of 584 million yuan in a single quarter, an increase of 18.26% over the same period last year, a net profit of 83 million yuan, an increase of 57.41% over the same period last year, and a deduction of 75 million yuan in non-return net profit, an increase of 52.90% compared with the same period last year. Q4's single-quarter performance reached an all-time high.
The organic pigment business performed steadily. In terms of business, the company achieved 1.904 billion yuan in revenue in the past 20 years, an increase of 0.75% over the same period last year, with a gross profit margin of 25.96%, a decline of 0.16 pct over the same period last year; intermediates achieved revenue of 85 million yuan, an increase of 14.76% over the same period last year, and a gross profit margin of 29.91%, increasing 2.99pct over the same period last year. In the past 20 years, the company produced 35800 tons of organic pigments, an increase of 7.61 percent over the same period last year, and sales of 35100 tons, up 4.31 percent over the same period last year. The overall performance of the company's organic pigment business is sound.
The 3000-ton high-performance organic pigment project is expected to contribute to the performance in 2021, and the metal sodium project is steadily recommended. According to the annual report, on December 27, 2020, the company conducted a trial production of 3000 tons of high-performance organic pigment project, which is expected to contribute incremental performance in 2021. In addition, the company's projects of 20,000 tons of metal sodium, 30,000 tons of liquid chlorine and 35000 tons of sodium hypochlorite are under construction, and the cumulative investment in the project accounts for 40.7% of the budget by the end of 2020.
Profit forecast and investment advice. We expect the company's earnings per share in 21-23 years to be 1.11 yuan, 1.38 yuan and 1.51 yuan respectively, and the current share price corresponds to 15 times, 12 times and 11 times earnings. According to our forecast, the annual compound growth rate of the company's earnings per share in 21-23 is expected to be 22%. With reference to the level of comparable public valuation, the company's 2021 earnings per share is valued at 22 times PE, corresponding to a reasonable value of 24.52 yuan per share, maintaining the "overweight" rating.
Risk tips. The price of organic pigment products fell, the price of raw materials fluctuated sharply; downstream demand remained depressed; the progress of projects under construction was lower than expected; major safety and environmental accidents.