Events:
On April 30, 2021, the company released its quarterly report for 2020: revenue of 944 million yuan, year-on-year + 144.45%, month-on-month + 21.20%, net profit 204 million yuan, year-on-year + 488.80%, month-on-month + 25.15%. The weighted average rate of return on net assets was 11.88%, an increase of 9.10% year-on-year and 1.21% month-on-month.
The gross profit margin of sales was 37.77%, an increase of 13.34% over the same period last year, and a decrease of 0.08% compared with the same period last year; the net profit margin of sales was 21.58%, an increase of 13.49% over the same period last year, and an increase of 0.65% over the same period last year.
According to the announcement, the net profit after deduction is expected to increase by 310% in mid-2021 compared with the same period last year, mainly due to the increase in the company's operating income and product gross profit margin.
Comments:
1. The supply and demand pattern of flame retardant products is good, with both volume and price rising, and is optimistic about the industry leader 2021Q1. The company's net profit of returning to its parent has increased by 488.80% compared with the same period last year, mainly due to the increase in sales revenue and gross profit margin. 2021Q1, the net cash flow of the company's operating activities was 87 million yuan, which was + 48 million yuan compared with the same period last year, mainly due to the increase in net cash inflow due to the enhancement of the company's profitability. The net cash flow generated by investment activities increased by 77.54% over the previous year, mainly due to a decrease in cash payments for debt repayment. The cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets was 52 million yuan, + 14 million yuan compared with the same period last year.
In terms of flame retardant demand, EU regulations require electronic displays with a screen area greater than 100 square centimeters to ban the use of halogen flame retardants from March 1, 2021. The global demand for brominated flame retardants in engineering plastics is the main potential alternative space at present. Phosphorus flame retardants BDP/PC and BDP/PC/ABS alloy constitute engineering plastics with high performance-to-price ratio and become the mainstream substitutes. On the supply side, there is no new capacity in the industry in the short term. In the case of less supply and an increase in demand, the industry may maintain a state of rising volume and price.
In the first quarter of 2021, the company's sales revenue of flame retardant products reached 769 million, year-on-year + 151.17%, month-on-month + 29.77%; sales volume 32700.74 tons, year-on-year + 86.78%, month-on-month + 13.91%; average price of flame retardant products 23518.13 yuan / ton, year-on-year + 34.37%, month-on-month + 13.93%.
2. Research and development is the king, adhere to innovation
In the first quarter of 2021, the company's R & D expenditure reached 24 million yuan, + 61.40% compared with the same period last year, accounting for 2.54% of operating income. In 2020, the company had 130 R & D personnel, accounting for 14.32% of the company's total employees. In 2020, the company applied for 16 invention patents, obtained 6 authorized invention patents and 5 utility model patents. By the end of the reporting period, the company has a total of 27 invention patents, 17 utility model patents, 6 software copyright and 58 applications (including 43 invention patents and 15 utility model patents). As the key high-tech enterprises of the National Torch Plan, the provincial research and development center of high-tech enterprises and the innovation demonstration and pilot enterprises of Zhejiang Province, the company has long attached great importance to technological R & D investment and improving the ability of independent innovation. Three R & D centers have been set up in Linhai headquarters, Taixing in Jiangsu and Zhangjiang in Shanghai. It has formed a research and development team based on the innovative research and development of flame retardants, amine promoters, catalysts and coating auxiliaries, and the integrated research of material application.
3. With the integration and multi-dimensional development of the industrial chain, the company plans to build a functional new material integration project in Weifang, Shandong Province. after completion, it will form an annual production capacity of 550800 tons of functional new materials, including 120000 tons of phosphorus oxychloride, 30,000 tons of phosphorus pentachloride, 232100 tons of new material flame retardants and special flame retardant auxiliaries, 130000 tons of high-end epoxy resins and auxiliaries, and 38700 tons of surfactants.
The construction period of the project is planned to be 4 years, and the project is expected to be completed in February 2025. Among them, the investment of the first phase of the project is 1.6 billion yuan, and the production capacity includes 70,000 tons of green polyurethane flame retardants, 50,000 tons of green engineering plastic flame retardants and 70,000 tons of phosphorus oxychloride, 100000 tons of high-end epoxy resins and auxiliaries, and 29300 tons of surfactants. The construction period is two years. At present, the project has been approved by the leading Group Office of the Chemical Industry Safety production Transformation and upgrading Special Action Office of Weifang Binhai Economic and technological Development Zone in Shandong Province, and the project record has been completed, and the environmental protection assessment is being carried out.
The company plans to raise 1.54 billion yuan in private additional shares, of which the first phase of the project plans to raise 1.35 billion yuan. After the completion of the project, it will further expand the company's scale and strength and consolidate the company's competitive advantage in the phosphorus flame retardant industry.
4. Investment suggestion: it is estimated that the net profit in 2023 is 8.35,9.72,1.131 billion yuan respectively, EPS is 1.72,2.00,2.33 yuan per share, corresponding to PE is 11,10,8 times, and the "highly recommended" rating is given.
5. Risk hint: the risk of project production falling short of expectation, the risk of product price decline, the risk of product demand decline, the risk of factory safety and environmental protection production, the risk of raw material price fluctuation, the risk of exchange rate fluctuation, the risk of sales falling short of expectation, etc.
