Events:
On April 20, 2021, the company released its 2020 annual report. In 2020, the company achieved a total operating income of 1.302 billion yuan, an increase of 7.29% over the same period last year, and a net profit of 85 million yuan belonging to shareholders of listed companies, an increase of 14.53% over the same period last year. From a quarterly point of view, the company achieved operating income of 428 million yuan in the fourth quarter, an increase of 21.97% over the previous quarter, and its mother's net profit was 25 million yuan, down 14.68% from the previous quarter.
Comments:
The production and sales of the company's main products rose sharply, and the increase in cost led to a decline in gross profit margin compared with the same In 2020, the company's ACR processing aids and impact modifiers realized operating income of 780 million yuan (YoY+1.67%), operating cost of 609 million yuan (YoY+3.62%), gross profit of 21.90% (YoY- 1.47%); MBS impact modifier realized operating income of 418 million yuan (YoY-2.13%), operating cost of 326 million yuan (YoY+4.06%), gross profit of 21.90% (- 4.64%)) The operating income of MC impact modifier is 93.4681 million yuan.
The sharp increase in production and sales led to a year-on-year increase in operating costs. In terms of sales volume, the company sold 114900 tons of PVC auxiliaries in 2020 (YoY+35.65%), of which ACR auxiliaries sold 67800 tons and MBS impact modifiers sold 36900 tons. In terms of output, the output of PVC auxiliaries is 118500 tons (YoY+41.19%), including 68000 tons of ACR auxiliaries and 40200 tons of MBS impact modifiers. In the second half of 2020, affected by the price of raw materials, the company correspondingly raised the price of ACR auxiliaries by an average of 11650.65 yuan per ton, an increase of 3.15% over the first half of the year, affecting the growth of business revenue. In mid-2020, the first phase of the MBS project with an annual output of 40,000 tons was completed. In order to expand the market share, the company appropriately reduced the price of MBS impact modifiers. The average price in the second half of the year was 11075.18 yuan / ton, down 5.20% from the first half of the year, affecting the decline in business income. During the reporting period, the operating cost of major products increased higher than income, resulting in a year-on-year decline in gross profit margin.
The increase in production capacity is large, and the company has strong profitability in the future. At present, the comprehensive production capacity of the company has reached 140000 tons, including 70,000 tons of ACR products, 50,000 tons of MBS products and 20,000 tons of MC products.
The company has a large investment in fixed assets and a large number of projects under construction. It is estimated that in 21 years, the second phase of MBS impact modifier project with an annual output of 40,000 tons (20,000 tons / year), the second phase of MC impact modifier project with an annual capacity of 40,000 tons (20,000 tons / year), the first phase of biodegradable polymer material PBAT with an annual output of 60,000 tons, the epichlorohydrin project with an annual capacity of 20,000 tons in Linyi Ruifeng, and the expansion project of 30,000 tons of ACR processing impact modifier in Linyi Ruifeng are expected to be completed in 21 years. The second phase of the PBAT project with an annual output of 60,000 tons of biodegradable polymer materials was completed in 22 years. Therefore, it is estimated that the company's ACR production capacity will reach 90,000 tons / year in 2021, MBS capacity will reach 70,000 tons / year, MC capacity will reach 40,000 tons / year, PBAT capacity will reach 60,000 tons / year, ECH capacity will reach 20,000 tons / year. In 2022, the production capacity of PBAT will reach 120,000 tons / year. After the future planned project is put into production, the company's profitability is expected to be further improved.
The demand for PVC auxiliaries is growing steadily, and the business prospect of PBAT is broad. At present, the company's main business is PVC auxiliaries business, at the same time, the company is actively arranging PBAT production, and there is more room for demand growth in the future. With the development of the real estate industry and the expansion of the downstream application fields of PVC, the demand for high-performance PVC products has increased. In recent years, China's PVC production and consumption have shown a steady increase. In 2016-2019, PVC production CAGR was 6.41%, and apparent consumption CAGR was 7.33%. The demand for PVC auxiliaries used in the processing and modification of PVC products will have great room for growth. In terms of PBAT, according to our estimation, with the landing of relevant national policies, the demand for degradable plastics in China in the four areas of takeout, express delivery, agricultural film and packaging bags will reach about 2 million tons, of which the demand for PBAT is expected to reach 1.49 million tons. There is a lot of room for market growth in the future.
Investment advice: with the rise in the price of the company's products and the gradual commissioning of projects under construction, we have adjusted the company's 21-22 net profit from 158 million yuan to 607 million yuan, and the 23-year net profit is expected to be 504 million yuan, maintaining the company's "buy" rating.
Risk tips: macro-economy is not as expected; raw material prices are not as expected; project construction is not as expected, etc.