Event: the company released its 2018 quarterly report, with operating income of 1.644 billion yuan, year-on-year-32.97%, and net profit of 274 million yuan, compared with-43.50% and 0.48 yuan of EPS.
Among them, Q3 company realized operating income of 431 million yuan, year-on-year-49.97%, return to the mother net profit of 74.9241 million yuan, year-on-year-50.50%, month-on-month-12.56%.
Environmental protection and safety production restrictions have a significant impact on the company's performance. The revenue of Q1, Q2 and Q3 of the company's main products is 2.36,1.85 and 121 million yuan respectively, the sales volume is 3450, 2210 and 950 tons respectively, and the average price is 6.83,8.38,1277 thousand yuan / ton respectively; the revenue of Q1, Q2 and Q3 filter cake of disperse dye is 0.95,0.98 and 115 million yuan respectively, the sales volume is 597,501,418 tons, and the average price is 15.99,19.48,2757 thousand yuan per ton respectively. The decline in the quantity and price of the company's products was mainly due to the Juxin biological explosion on December 9, 2017 and the complete suspension of production in Guannan and Guanyun parks on April 28, 2018. Seven subsidiaries and one branch in the chemical park in Duigou Gang Town, Guannan County, where the company is located, all stopped production, accounting for 82.85% of revenue in 2017. By the end of the reporting period, although some of the company's major subsidiaries had completed rectification as required. But no company has resumed production as planned. As a result of the above factors, the operating rate of the company in the first to third quarters was insufficient, the sales revenue decreased, and the cost of stopping production increased, resulting in a decline in the efficiency of the company in the current period compared with the same period last year.
Some subsidiaries announced the resumption of production, and the operation of the company is expected to resume gradually. On October 12, 2018, the company received the "notice of the County Government on organizing the resumption of production of Hua'er Chemical Industry and other enterprises" from the relevant government departments, confirming that three enterprises of Hua'er Chemical Industry, Yabang Dye Lianyungang Branch and Yabang Acid making Company have the conditions for resumption of production and agreed to resume production. The above three companies accounted for 62.97% of the company's 2017 operating income and 96.44% of the net profit. Other enterprises of the company are actively promoting the rectification work according to the enterprise rectification standards of the coastal chemical park in Jiangsu Province, and strive to complete the rectification work as soon as possible, submit an application for resumption of production to the government department, and resume production as soon as possible. At the same time, the company will act in accordance with the Stock listing rules of the Shanghai Stock Exchange
And other laws and regulations, in compliance with the rules, apply to the Shanghai Stock Exchange for the revocation of the "other risk warning".
It is proposed to acquire Xuzhou Keda to strengthen vat dyes. On September 6, the company signed a "letter of intent" with Kaida Chemical to acquire Kaida Chemical. Kaida Chemical is mainly engaged in the production, operation and export of vat dyes and dye intermediates, with a dye production capacity of 10000 tons, which has certain advantages in production scale, product quality, process technology, sales channels, exclusive market (such as military) and so on. Through the acquisition of Keda Chemical, the company will further improve the company's product structure and steadily increase the company's vat dye market share, which will have a positive impact on the company's dye business.
It is proposed to acquire Yadong in Ningxia to improve the pesticide industry chain. Subsidiary Henglong crops plans to buy 100% equity in Ningxia Yadong for 132 million yuan. The net profit of Ningxia Yadong in 2019, 2020 and 2021 will be no less than 21 million yuan, 18 million yuan and 18 million yuan respectively, and the cumulative net profit in three years is 57 million yuan. Ningxia Yadong mainly produces herbicide intermediates, and its main business has obvious synergistic effect with Henglong crops. Through the acquisition of Yadong in Ningxia, on the one hand, it can further improve the Henglong crop industry chain, on the other hand, it can expand the production capacity of its main products and increase its market share. At present, Henglong crops are in a state of suspension, and through the acquisition of Yadong in Ningxia, part of the production capacity can be transferred and the risk can be dispersed.
Give a "buy" investment rating. It is predicted that the 18-20-year net profit of the company is 432 million, 664 million and 811 million respectively, and the EPS is 0.75,1.15,1.41 yuan respectively, and the corresponding PE is 11 times, 7 times and 6 times respectively. Give a "buy" rating.
Risk tip: the risk of falling product prices and resuming production is lower than expected.