Event: the company issued an interim performance notice, which is expected to turn losses into profits compared with the same period last year, realizing a net profit of about 16.5 million yuan belonging to shareholders of listed companies, and about 13.3 million yuan after deducting non-return net profit.
Star Lake Science and Technology is a leading manufacturer of nucleotide and amino acid products in China. The company is a manufacturing enterprise with physical and chemical industry as the core technology, mainly engaged in food and feed additive business and biochemical raw material drug business.
At present, the company has a production capacity of 10000 tons of nucleotide additives and 4094 tons of biochemical APIs and intermediates.
The industry pattern of the small variety Ishig is good, the price rises sharply, and the company has great flexibility. The company has a production capacity of 10,000 tons of flavor nucleotide disodium (Ironucleotide G). ITung belongs to a small variety of products, is a freshening agent, downstream is mainly used in condiments, instant noodles and other fields. At present, the domestic demand for iTung products is about 40,000 tons a year, and the domestic production capacity is about 45000 tons. Due to the large amount of waste water produced in the production process of Ilagg, since 2017, the operating rate of the domestic industry has been limited due to environmental factors, so the price of Irong products began to rise. In June 2017, the price of iTung was 60,000 yuan per ton, and by June 2018, the quotation of its products has reached 102,000 yuan / ton. Based on the company's annual product sales of 6406 tons (2017 sales data), assuming that the cost remains stable, the company's net profit increases by 46.94 million yuan (15% income tax rate) for every 10,000 yuan / ton increase in the sales unit price (including tax).
In the first half of the year, the company benefited from the rise in volume and price of Ivy G products, and its performance picked up. The company's operating income in the first half of the year increased by about 59% compared with the same period last year, among which the increase in sales volume and unit price of nucleoside products was the main reason for the rebound in the company's performance.
Is promoting the merger and acquisition of Sichuan Jiuling Pharmaceutical Technology Co., Ltd. The company plans to buy 100% equity in Jiuling Pharmaceutical by issuing shares and paying cash. The transaction price is 394 million yuan, of which the consideration paid by the issued shares is 256.1 million yuan, and the cash consideration is 137.9 million yuan. The announcement said that the company intends to raise no more than 167.9 million yuan from non-public offerings of no more than 10 specific investors. Jiuling Pharmaceutical provides professional R & D and production services of pharmaceutical intermediates for downstream customers through CMO business and multi-customer product business. In addition, the non-return net profit promised in the terms of the performance compensation agreement signed by the other party and the company is not less than 3020 yuan, 3200 yuan, 3790 yuan and 43.5 million yuan respectively from 2017 to 2020.
Profit forecast and rating. Without considering the situation that the company issues shares to pay cash to purchase assets and raise funds, it is estimated that the EPS from 2018 to 2020 will be 0.09,0.18,0.26 yuan respectively. Coverage for the first time, giving a "overweight" rating.
Risk hint: the risk that the company's performance falls short of expectations due to large fluctuations in the prices of raw materials and products, the risk of fluctuations in the company's performance caused by environmental factors, and the risk of M & A failure.