The performance is in line with KuaiBao.
Lufeng Environmental Protection achieved 2.41 billion yuan in revenue in 2013, up 17% from the same period last year, while the net profit attributed to the parent company was 7.41 million yuan, down 64% from the same period last year, equivalent to 0.02 yuan per share, in line with KuaiBao's performance. The company plans to pay a cash dividend of 0.1 yuan (63% dividend rate) for every 10 shares.
Comments: 1) the gross profit margin of the company's household foil and flexible packaging foil products increased by 1.9 and 3.4 percentage points to 12.1% and 16.5%, respectively. 2) Management expenses increased by 35% compared with the same period last year, mainly due to the increase in taxes, fees, depreciation and amortization in the current period. 3) Financial expenses increased by 25% compared with the same period last year, mainly due to the increase in liquidity requirements and investment in projects under construction leading to an increase in short-term borrowing.
Trend of development
The structure of aluminum foil products is gradually adjusted. At present, the demand for household and medicinal aluminum foil at home and abroad is growing relatively slowly. on the one hand, due to the relatively slow recovery of fundamentals at home and abroad, the demand for aluminum foil at home and abroad has been affected to varying degrees. On the other hand, it still takes a long time for consumers to improve their environmental awareness and living standards, and it will take time to replace plastic cling film and disposable lunch boxes. Therefore, the company is committed to adjusting the product structure of aluminum foil, and the proportion of container foil with strong profitability is gradually increasing.
The fixed increase project is expected to reduce the production cost, but the profit contribution of the project still needs to be observed. The equipment of the first phase of the cold rolling part of the 450000 ton high precision aluminum plate and strip project was completed and put into production at the end of March 2014. as the project is gradually put into production, the company's direct use of liquid aluminum production will reduce the secondary remelting cost. the lower energy price in Qinghai is also conducive to further reducing production costs, but the specific profitability of the project remains to be seen. The 30, 000-ton aluminum foil project lost 6.2 million yuan this year, mainly due to lower-than-expected output due to equipment commissioning after it was put into production in May 2013, which is expected to contribute positive profits this year.
Profit forecast adjustment
Maintain a 2015 profit forecast of 0.03 pesos in 2014. Assuming that the processing fee will be the same this year and next, the unit cost will be + 5%, and the output of aluminum foil will increase by 23% and 0%.
Valuation and suggestion
Earnings will remain low and share prices lack catalysts. Due to the weak macro environment at home and abroad, the decline in metal prices, and the relatively limited growth rate of demand for the company's main products, the stock price continues to fluctuate at a low level, so it is currently 250 times for Pamp E and 1.9 times for Pamp B in 2014. Future performance is lack of bright spots, profits remain low, stock prices lack of catalysts, maintain A-share target price of 5.8 yuan (target Pshock B is 1.6x) and "neutral" rating.