Event: on the evening of October 21, Yangzi Xincai released its 2013 Quarterly report. During the reporting period, the company realized operating income of 1073.53 million yuan, up 15.93% over the same period in 2012; net profit belonging to shareholders of listed companies was 30.94 million yuan, up 5.49% over the same period in 2012; and basic earnings per share was 0.19 yuan. It's in line with our expectations.
Comments:
The performance is in line with expectations. Under the influence of the continuous downturn of the global macro-economy, the investment in the downstream industry of the organic coated board industry has obviously weakened, thus affecting the demand for organic coated board products, making the contradiction between supply and demand in the industry prominent, and the company's performance has also been inevitably affected. During the reporting period, the company actively opened up new customers by increasing its sales team. under the depressed situation of the industry as a whole, the single-quarter sales in the third quarter rebounded obviously. The company's quarterly operating income in the third quarter was 400.56 million yuan, an increase of 29.29% over the same period last year, compared with 3.75% and 13.85% in the first and second quarters. In addition, the company's gross profit margin in the first three quarters was 8.44%, down 0.3 percentage points from the same period in 2012, mainly because the company sacrificed product prices to some extent in order to increase sales. On the other hand, the rate of expenses during the period decreased by 0.31 percentage points from the same period last year to 4.96%, which remained basically stable. On the whole, the company's three-quarter performance has improved significantly compared with the previous period.
It is optimistic about the development prospect of functional organic coated board. At present, the supply of common organic coated plates in China exceeds the demand, and the homogenization competition is still fierce in the future. Functional boards benefit from the upgrading of the domestic industrial structure and the construction of strategic emerging industries, and the market demand is showing a rapid upward trend, and its proportion in organic coated panels is expected to reach 32% in 2015, an increase of 14 percentage points over 2011. Yangzi New material, as one of the private enterprises that entered the organic coated board industry earlier in China, has mastered the key technologies and processes for the production of functional organic coated plates, such as high cleanliness, antistatic, high toughness and dirt resistance, and is a national high-tech enterprise.
The fund-raising project is progressing smoothly and seizing the high-end market. The company now has an annual production capacity of 80, 000 tons of organic coated plates and a substrate capacity of 200000 tons. After the completion of the fund-raising project (we expect to reach production in February 2014), the production capacity of functional organic coated boards will be increased by 220000 tons per year. The company's "substrate-organic coating plate" production chain will be further improved, and the existing product structure will also be optimized and upgraded. In addition, due to the high gross profit margin of the function board, with the increase of its proportion of income, the company's performance is expected to improve gradually.
Profit forecast and rating: we maintain the company's diluted EPS of 0.26,0.35,0.48 yuan from 2013 to 2015. Taking into account the leading position of Yangzi New Materials in functional organic coated boards and the high probability of performance improvement in the next few years, we maintain the company's "overweight" rating.
Risk factors: economic operation is declining, downstream demand is slowing down; production line construction process is lower than expected; accounts receivable has increased significantly.