Event
Event 1: the company released its annual report for 2020, with revenue of 8.912 billion yuan in 2020, a decrease of 19.3% compared with 11.048 billion yuan (adjusted) in 2019. The net profit returned to the mother was 371 million yuan, a decrease of 43.1% compared with 651 million yuan (adjusted) in 2019, and the non-return net profit was 126 million yuan, a decrease of 69.3% compared with the 409 million yuan (adjusted) in 2019. In 2020, Q1, Q2, Q3 and Q4 realized revenue of 2.514 billion yuan, 2.471 billion yuan, 2.88 billion yuan and 1.047 billion yuan respectively, and realized net profit of 53 million yuan, 2.49 million yuan, 79.0 million yuan and 236 million yuan respectively.
Event 2: the company released a first-quarter report in 2021 that the company's Q1 revenue in 2021 was 3 billion yuan, an increase of 19.2% compared with 2.51 billion yuan (adjusted) in the first quarter of 2019, and a net profit of 346 million yuan. A sharp increase of 551.8% over the 53 million yuan in the first quarter of 2019 (after adjustment) The net profit after deducting non-return was 325 million yuan, a substantial increase of 566.0% compared with 49 million yuan (after adjustment) in the first quarter of 2019.
Brief comment
In 2020, the price of the company's main products is under pressure, and operating income has declined. The company is mainly engaged in the production and sales of nylon 66 industrial filament, cord fabric, slicing, adipic acid and other products, mainly downstream for tires, automobiles and other industries. Due to the sudden COVID-19 epidemic, according to the Ministry of Industry and Information Technology, China's automobile production and sales in 2020 were 25.225 million and 25.311 million respectively, down 2% and 1.9% respectively from the same period last year. By increasing the development of the domestic market, the company continues to expand its market share, and the sales volume of its main products has gradually increased since 2020H1, but the prices of its products have declined in varying degrees in 2020. The company achieved revenue of 8.912 billion yuan in 2020, a decrease of 19.3% compared with 11.048 billion yuan (adjusted) in 2019. In terms of products, industrial silk (sales volume is the same as the same period, price decline): the company's nylon 66 industrial silk achieved revenue of 1.22 billion yuan in 2020, down 15.9% from 2019 (1.45 billion yuan). The sales volume in 2020 was 49000 tons, which was basically the same as that in 2019 (49000 tons); the average selling price in 2020 was 25,000 yuan / ton, and the price was 12.6% lower than that in 2019. Cord fabric (sales volume up, price slightly down): the company achieved revenue of 2.02 billion yuan in 2020, 7.8% lower than in 2019 (2.19 billion yuan), of which the sales volume in 2020 was 67000 tons, an increase of 4.7% compared with 2019 (64000 tons). The average selling price in 2020 was 300,000 yuan / ton, and the price was 3.2% lower than in 2019. Nylon 66 slices (sales increase, price decline): the revenue of nylon 66 slices in 2020 was 2.41 billion yuan, which was 22.3% lower than that in 2019 (3.1 billion yuan). Compared with 2019 (153000 tons), the average selling price of nylon 66 slices in 2020 was 7.8% higher than that in 2019 (153000 tons). The average selling price in 2020 was 18,000 yuan / ton, and the price was 12.4% lower than that in 2019. Refined adipic acid (sales increase, price decline): the company achieved an income of 790 million yuan in 2020, of which the sales volume was 187000 tons, an increase of 16.3% over 2019; the average selling price was 5455 yuan / ton, down 22.6% from the same period in 2019. The downstream demand recovers quickly and the company's 2021Q1 performance reaches a new high: in the post-epidemic era, China's automobile industry chain has fully recovered. According to the Ministry of Industry and Information Technology, China's automobile production and sales completed 6.352 million and 6.484 million respectively, an increase of 81.7% and 75.6% respectively over the same period last year. The company benefited from the strong downstream demand 2021Q1 achieved revenue of 2.997 billion yuan, an increase of 19.9% over the same period in 2019 (after adjustment) of 2.514 billion yuan. The net profit returned to the mother was 346 million yuan, a substantial increase of 551.8% over the 53 million yuan in the first quarter of 2019 (after adjustment). The company's 2021Q1 products are as follows: industrial silk: nylon 66 industrial silk achieved an income of 350 million yuan, sales volume of 13800 tons, the average selling price of 25,000 yuan / ton, an increase of 1.6% over the same period last year, and an increase of 14.3% compared with the previous year. Cord fabric: the income of cord fabric is 610 million yuan, the sales volume is 20000 tons, and the average selling price is 310,000 yuan / ton, which is 0.2% lower than the same period last year and 9.9% higher than the previous year. Nylon 66 slices: the income of nylon 66 slices was 910 million yuan, the sales volume was 40000 tons, and the average selling price was 27,000 yuan / ton, an increase of 39.8% over the same period last year and 34.0% from the previous year. Refined adipic acid: the income of refined adipic acid was 310 million yuan, the sales volume was 50000 tons, and the average selling price was 7934 yuan / ton, an increase of 14.7% over the same period last year and 25.0% from the previous year.
Complete major asset restructuring, nylon 66 whole industry chain layout: the company's main products are nylon 66 chips, cord fabric and industrial silk, nylon chemical industry mainly produces nylon 66 salt and intermediates adipic acid, adipic acid, cyclohexane and so on. Adipic acid is the leading product of nylon chemical industry. In 2020, the company successively purchased 37.72% of Nylon Chemical held by China Pingdingshan Shenma Group by issuing shares and convertible bonds, and acquired 26.04% of Nylon Chemical held by Henan Pingdingshan Shenma Group Industrial Transformation and Development Fund (Limited Partnership) in cash, enabling the company to achieve 100% shareholding in Nylon Chemical. It has formed a new industrial pattern based on nylon 66 salt and nylon 66 salt intermediate products, nylon 66 slices, modified engineering plastics, industrial filament (cord fabric), BCF carpet wire, airbag wire and other leading products, and relying on raw and auxiliary materials and related products, thus becoming one of the few market leading enterprises in the domestic nylon 66 industry with large-scale and integrated production capacity of upstream raw materials. The company now has a production capacity of 290000 tons of adipic acid, 210000 tons of nylon 66 chips, 130000 tons of industrial silk, 80,000 tons of cord fabric and 30,000 tons of nylon filament. In 2020, the operating rate of adipic acid was 90%, and the sales volume was 187000 tons, an increase of 16.3% over 2019. In the future, with the full recovery of the automobile industry chain and the trend of automobile lightweight, as well as the domestic production of adipic nitrile, the engineering plastics used in the automobile industry will become the main driving force to drive the demand for nylon 66 chips. Downstream traditional PA66, PA6 industry a new round of rapid growth superimposed PBAT and other emerging industries demand has increased, adipic acid demand is expected to increase significantly. It is estimated that the domestic demand for adipic acid will reach 1.9 million tons by 2025, in which soles, PU size, nylon 66 and salt account for 18%, 16% and 22% respectively.
Project construction and product innovation go hand in hand to create an international first-class nylon industrial cluster: relying on the advantages of the existing industrial chain, the company continues to promote the construction of new projects to achieve a complete layout of the whole industrial chain. The company's 40,000 tons of nylon 66 differential industrial silk project of 20,000 tons has been completed and put into production, which has enhanced the production capacity of the company's differentiated high-quality industrial silk. In addition, the company's 400000-ton PC (first phase 100000 tons) project, 25000-ton BOPA film project, 400000-ton industrial matching coal hydrogen-to-ammonia project, 30,000-ton 1BI 6-hexanediol project and 50,000-ton adipic nitrile project are also being promoted in an all-round way. Although the production capacity of nylon 66 slices in China has increased greatly in recent years, the import dependence of high-end nylon 66 products in China is still very high. according to the current situation of the industry, the company continues to increase R & D investment and defines the development direction of differentiation, refinement and high-end. The company's R & D expenses in 2019 and 2020 were 413 million yuan and 352 million yuan respectively, accounting for 3.7% and 3.9% of revenue respectively. The company is expected to achieve domestic substitution through product innovation, and then form a new profit growth point, nylon 66 special fiber:
At present, special nylon 66 fiber mainly depends on imports, and the product price is 10,000 yuan / ton higher than that of fine denier filine. at present, the development of nylon 66 fiber is in the pilot stage; aramid bead: the company is committed to breaking through the domestic gap in filling the tire lip skeleton material of rickshaw tire in order to develop aramid bead instead of steel bead and imported products. at present, the company already has the ability of small batch trial production of aramid bead. Special special high-strength nylon 66 skeleton material for aircraft tire: based on the existing technology, develop high-performance high-performance nylon 66 skeleton material for aircraft tire with independent intellectual property rights. The company has a long-term plan to establish 2000 tons / year ultra-high-strength industrial silk and special ultra-high-strength nylon 66 dipped cord fabric skeleton material. Through the continuous promotion of new projects and the research and development of high-end and differentiated products, the company is committed to creating an international first-class nylon industrial cluster with the largest scale, the most complete industrial chain, the most obvious agglomeration effect and the strongest competitiveness in the world. to become a world-class value creator of nylon industrial chain.
Profit forecast and valuation: the net profit of the company in 2021, 2022 and 2023 is expected to be 1.315 billion yuan, 1.438 billion yuan and 1.557 billion yuan respectively, the EPS is 1.43,1.56 yuan and 1.70 yuan respectively, and the corresponding PE is 8.1x, 7.4x and 6.8x respectively. Give a valuation of 12 times PE based on the 2021 earnings forecast, with a target price of 17.16 yuan, maintaining the "buy rating".