Events:
On April 9, 2020, the company announced its 2019 annual report: operating income was 2.735 billion yuan, up 101.0% over the same period last year; net profit from home was 166 million yuan, up 35.75% from the same period last year; and basic earnings per share was 0.41 yuan, up 37.0% from the same period last year. It is proposed to distribute a cash dividend of 1.23 yuan (including tax) to all shareholders for every 10 shares.
On April 9, 2020, the company announced its quarterly report for the first quarter of 2020: operating income of 619 million yuan, down 8.02% from the same period last year, and net profit of 69 million yuan, an increase of 91.6% over the same period last year.
Comments:
1. 2019 annual report + 35.75%, in line with our expectations
In 2019, the operating income was 2.735 billion yuan, a sharp increase of 101.0% over the same period last year; the net profit was 166 million yuan, an increase of 35.75% over the same period last year; of which 2019Q4 realized a net profit of 39 million yuan, + 11.43% over the same period last year. The company's 2019 annual report and single-quarter revenue increased significantly, mainly due to the consolidation of Haier New Materials; the year-on-year improvement was mainly due to the contribution of Haier New Materials, the increase in TPV sales and the increase in TPV gross profit margin (34.19%, an increase of 3.93% over 2018).
2020Q1, the company achieved a net profit of 69 million yuan, a sharp increase of 91.6% over the same period last year, mainly due to the continuous supply of Dowen's mask meltblown material under the epidemic.
2. The volume of TPV continues to increase, and at the same time enter the non-car field to play a leading role.
At present, the company has a TPV production capacity of 22,000 tons / year. As an ideal material to replace the traditional thermosetting rubber material, TPV has a broad development prospect. with the rise of domestic cars and the increase of the proportion of vehicles using TPV, the permeability of TPV in the automobile has increased steadily. It is estimated that by 2021, the total domestic car sales will be 32 million units, corresponding to the total demand for automobile TPV of 160000 tons. At the same time, TPV is promoted into non-automotive fields, such as new sports flooring, environment-friendly plumbing and so on. However, domestic TPV production capacity is insufficient, which mainly depends on imports. As the third largest TPV manufacturer in the world and the largest domestic producer, Dawn Co., Ltd. will further expand the production and sales scale of TPV to form import substitution. The follow-up company will also add 11000 tons of production capacity to 33000 tons, further increase market share, play the leading effect, and enhance profitability.
3. HNBR has been put into production smoothly and has been sold gradually; TPIIR exports are being promoted.
Domestic use of HNBR basically rely on imports, the company through hydrogenation platform technology, filled the domestic blank, the company in March 26, 2019 put into production 1000 tons of HNBR capacity for trial production, June 2019 officially put into production, equipment operation stability, has gradually started sales, through the exploration of parameters, curing process, performance improvement, basically achieved the annual target, shortlisted in Shandong Province new and old kinetic energy conversion major project database. HNBR equipment converted to 84.28 million yuan in 2019, due to the current load upgrading stage, the cost per ton is relatively high, it is expected that with the promotion of sales, the increase of load, profitability will gradually reach the expected level. The remaining 2000 tons of HNBR capacity is expected to be put into production in 2021, and the product is expected to contribute considerable performance.
In addition, the company also sets up an esterification platform to produce high-end TPU. At present, the company has a production capacity of 10,000 tons of TPU, bringing new performance growth points; TPIIR is a substitute for thermosetting brominated butyl rubber, the application field is medical rubber plugs, the domestic demand has reached 35 billion, and the demand for raw materials is about 60,000 tons. At present, the company's additional 3000 tons of TPIIR production capacity already has the production conditions, and has obtained the FDA certification of the United States and the USP level 6 certification of the Federal Pharmacopoeia of the United States. On October 22, 2019, Dawn High Materials (Beijing) was registered, the export business was started, and it is docking foreign customers. The remaining 7000 tons of TPIIR is expected to be put into production by the end of June 2021, further improving profitability. Dawn shares is the first mass-produced TPIIR, which is expected to replace the traditional rubber plug material in the future.
4. The application for convertible bonds has been examined and approved by the China Securities Regulatory Commission.
The total investment of Dawn Polymer New Materials Project is 460 million yuan, including 360 million yuan of project investment (no more than 260 million yuan of funds to be raised), 100 million yuan of loan repayment and supplementary working capital (no more than 100 million yuan of funds to be used).
Haier new materials existing factory was built in 2001, is currently in full capacity production, at the same time the degree of automation is not high, warehouse turnover has reached a bottleneck. Through the implementation of this project, the company plans to build a new thermoplastic polymer material factory with an annual output of 120000 tons in Jiaozhou Economic and technological Development Zone of Jiaozhou City. The implementation of this project will further enhance the company's modified plastic production capacity, alleviate the current capacity bottleneck, and meet the needs of the company's future business development. The construction period of the project is 12 months. The company expects that after the project reaches production, the average annual profit will be 98.8219 million yuan, the financial internal rate of return of the project is about 16.88% (after tax), and the payback period of investment is about 6.97 years (excluding the construction period).
At present, the project EIA report has been approved. On March 20, 2020, the application for convertible bonds was examined and approved by the Securities Regulatory Commission.
5, and show Qingdao Haier new materials, open the field of home appliances modified plastics new layout company to 258 million yuan to acquire 80% of the shares of Qingdao Haier new materials and has been consolidated in December 2018. Qingdao Haier New Materials is mainly engaged in engineering plastics, special plastics, plastic composites, chemical auxiliaries and other businesses, its downstream customers are Haier Group and other enterprises, the company's acquisition into the field of Haier home appliances modified plastic supply system, is expected to form complementary products, the formation of a new situation of coordinated development.
6. Investment rating and valuation: the annual return net profit in 2020-21-22 is estimated to be 289 million yuan respectively, and the PE is twice as much as 68-66-58, giving it a "recommended" rating.
7. Risk hints: the demand of the downstream automobile market is declining, the progress of TPV promotion is not up to expectation, the construction of new capacity is not as expected, the contribution performance of new capacity is not as expected, the price of raw materials fluctuates, the price of melt blown material fluctuates, the change of environmental protection policy, and the economy declines substantially.