Yongtai Technology: fluorobenzene fine chemicals faucet. Yongtai Technology is a manufacturer of fluorobenzene fine chemicals with complete product chain and large production capacity in the world. According to the terminal application field, the company's main products are divided into three categories, including medicine, pesticide, lithium electricity and other materials. The company has the world's leading advanced manufacturing technology and production capacity of fluorine-containing aromatic fine chemicals, and occupies a leading position in this field. In the first quarter of 2021, there was a strong demand in the downstream industry, with full orders for lithium battery materials, lithium hexafluorophosphate and other products, with both volume and price rising; the company achieved operating income of 853 million yuan in the first quarter, an increase of 67.98% over the same period last year; and its net profit was 72.9 million yuan, an increase of 23.15% over the same period last year.
Capacity expansion superimposed price rise, lithium hexafluorophosphate product profitability is expected to increase. Since the second half of 2020, the price and price difference of lithium hexafluorophosphate have continued to rise. According to Zhuochuang information data, the average price and average price difference of lithium hexafluorophosphate in the first quarter were 155,000 yuan / ton and 127,000 yuan / ton, respectively, up 59.66% and 60.40% from the previous year. 83.42% and 95.10% of the latest price and price difference on June 18 were 315000 yuan and 2808 million yuan per ton, respectively. By the end of 2020, the company has put into production 2000 tons of lithium hexafluorophosphate production line, and plans to expand two lithium hexafluorophosphate workshops in 2021, with a total production capacity of 8000 tons / year. Capacity expansion superimposed price rise, we believe that the company's lithium hexafluorophosphate product profitability is expected to increase.
Pharmaceutical products have been approved by FDA, and capacity expansion enhances the competitive advantage of pharmaceutical and pesticide business. At present, four ANDA applications of Yongtai Pharmaceutical preparation internationalization Project have been approved by FDA of the United States and are being commercialized. According to the company's announcement on May 28, Inner Mongolia Yongtai, a subsidiary, plans to invest 800 million yuan to build the second phase of the project to form an annual production capacity of 14770 tons of advanced pharmaceutical intermediates, pesticide intermediates and crude drugs and related products. The construction period of the production project is expected to be about 2 years. We believe that capacity expansion will enhance the company's competitive advantage in pharmaceutical and pesticide business and ensure profitability.
VC, FEC capacity expansion, to provide new profit growth points. According to the company's announcement on June 5, Inner Mongolia Yongtai, a subsidiary, intends to invest 150 million yuan in the construction of the third phase of the project to form an annual production capacity of 500t HMPCA, 800t C1202, 3000 t FEC, 5000 t VC and other projects. The company expects the construction period to be about 2 years. Among them, FEC, VC and other electrolytes and their important additives have limited production capacity and high prices. FEC and VC projects can rebuild the original equipment in the existing workshop, which is shorter than the construction cycle of the new project. According to the company's previous experience in other reconstruction projects, the reconstruction cycle of FEC and VC projects is generally 2-3 months. The company expects the third phase of the project to increase its annual income by 1.7 billion yuan and its annual net profit by 125 million yuan. We believe that capacity expansion is expected to provide a new profit growth point for the company.
Profit forecast and investment rating. We estimate that the EPS of the company in 2021-23 will be 0.47,0.67,0.86 respectively. The company is the leader of fluorobenzene fine chemicals, giving a certain valuation premium to 47-49 times PE, in 2021 corresponding to a reasonable value range of 22.09-23.03 yuan, with a rating of "better than the big city" for the first time.
Risk hints: product prices fluctuate sharply; project production falls short of expectations; industry prosperity declines.