Event

On October 25, the company released its quarterly report for 2017. during the reporting period, the company achieved operating income of 1.423 billion yuan, an increase of 3.20% over the same period last year, and net profit of 66.91 million yuan, down 33.17% from the same period last year.

Brief comment

The third quarter results were in line with expectations, with profits reduced as a result of the rise in raw materials.

The company is the world's largest production scale of nitrocellulose production enterprises, production and sales for many years ranked first in the world, is the world nitrocellulose industry association one of the three executive units, is the domestic and international nitrocellulose industry leading enterprises. The company is mainly engaged in the production and sales of nitrocellulose series products, which are esters in the huge cellulose derivative family, which are widely used in paint, ink, sporting goods, cosmetics and other fields. including H-type nitrocellulose, L-type nitrocellulose, containing energy nitrocellulose, including more than 70 different types of nitrocellulose products. The company has formed a complete industrial system integrating nitrocellulose production, sales, research and development.

The company's performance declined in the first three quarters, and the change in performance was due to the stable business situation of the company's nitrocellulose, industrial pump products, protective equipment and other products, with higher sales prices of nitrocellulose but higher prices of cotton cashmere, the main raw materials, resulting in a reduction in the company's profit margin. During the reporting period, the company achieved an operating income of 544 million and a net profit of 42.86 million yuan.

On the same day of the release of the report, the company also issued an announcement on the proposed transfer of the equity of the holding subsidiary, and the company intends to list and transfer 80% of the holding subsidiary Beijing Northern Century Cellulose Technology Development Co., Ltd. According to the company's development strategy, the purpose of transferring the subsidiary is to optimize the asset structure and adjust the mode of foreign technical cooperation.

The leading position of the industry remains unchanged, and the brand advantage is obvious.

The company is the only special chemicals listed company under the China Arms Industry Corporation. The production and marketing scale of nitrocellulose ranks first in the world for many years. It can provide more than 70 types of nitrocellulose products in three categories from ultra-high seconds to ultra-low seconds, and provide nitrocellulose raw materials for table tennis in international competitions.

Nitrocellulose plate: since 2004, the company has consistently ranked first in production and sales in the world, with a production capacity of about 60,000 tons / year. The company provides the most complete product brands, can supply different viscosity, different wetting agent products of nitrocellulose. The nitrocellulose products of the company's "SNC", "NICELO" and other brands sell well in more than 50 countries and regions in the world, and have a perfect marketing network, which can provide customized products of different brands, wetting agents, product forms and product protection according to customer needs. At the same time, the fine breaking degree of energetic cotton, nitrocellulose solution and the viscosity range of nitrolacquer chips can be customized according to customer needs. The company's nitrocellulose products have a domestic market share of 53% and an international market share of 25%. The scale of domestic production and marketing is the first, and the international market is in the forefront.

Special industrial pump plate: the company's special industrial pump series products are produced by the holding subsidiary pump Company, which has more than 40 years of experience in R & D and manufacturing of special industrial pumps. is the only introduction of foreign corrosion-resistant, wear-resistant pump design and manufacturing technology and special steel smelting casting technology enterprises. The company's flue gas desulfurization pumps and phosphorus chemical pumps account for 40% and 70% of the domestic market respectively. The company's "May 25" registered trademark has been recognized as a national well-known trademark, and the brand has maintained the title of "Hubei famous Brand products" over the years. And exported to more than 20 countries and regions.

Profit forecast and investment rating: the future development prospect is promising, covering for the first time, giving the rating of increasing holdings.

The global consumption of nitrocellulose products remains basically stable, the company moves forward in service, grabs orders flexibly by price adjustment, systematically plans product markets, optimizes sub-regional operations, focuses on long-term strategic cooperation customer groups, and actively opens up foreign trade markets. we are optimistic about the company's future development prospects, and the company's net profit from 2017 to 2019 is expected to be 0.78,0.87,103 million yuan respectively. The year-on-year growth was-7.14%, 11.54% and 18.39% respectively, and the corresponding EPS from 17 to 19 years was 0.19,0.21,0.25 yuan respectively, and the previous share price PE was 73,66 and 55 times respectively, covering for the first time and giving an overweight rating.

Risk hint

Downstream demand continues to be depressed, and new product research and development falls short of expectations.