Event: in the first half of 2020, the company achieved revenue of 490 million yuan, + 25.69% compared with the same period last year, and net profit of 37 million yuan, + 123.40% compared with the same period last year. In the second quarter alone, the company realized revenue of 297 million yuan, year-on-year + 33.33%, month-on-month + 54.13%, and net profit of 33 million yuan, + 210.83%, and + 805.77%, respectively.
The new material project has been gradually put into production, and the income of general modified plastic products has increased significantly. At present, the market demand for automobiles and home appliances in China is still in the doldrums, and the traditional modified plastic industry has been greatly impacted. The company actively develops and launches differentiated materials and carries out epitaxial acquisitions (Deqing Kesai merged in May 2019). Improving the proportion of high-end product structure is the main reason to help the company to go against the trend and achieve significant revenue and performance growth. Among them, the most eye-catching performance is the general modified plastic plate, during the reporting period, the income was 185 million yuan, + 48.09% year-on-year, and the gross profit margin reached 25.51%, + 12.50 pct over the same period last year, mainly benefiting from the gradual production of the initial public investment project of new materials. As of the first half of the year, the investment progress of the project was 99.29% and the benefit was 30 million yuan. In addition, according to the announcement, the company contributed to the epidemic, the timely expansion of melt blown material production, the use of PP and MF in the manufacture of medical bedboards, and the manufacture of epidemic prevention eliminate virus drones for customers by PA and CF, all of which made positive contributions to the improvement of revenue and profitability of the company's general modified plastics.
Benefit from 5G promotion, the company's LCP and PTFE continue to expand. Walter Special, as the main body of the company's LCP R & D and production, achieved a net profit of 710000 yuan in 2019 and turned a loss into a profit (944 yuan and 5.61 million yuan respectively in 2017-2018). In the first half of this year, the company achieved a net profit of 1.72 million yuan, which exceeded the profit level of last year. The company's acquisition of Deqingkosai, the main business of PTFE, achieved a net profit of 9.46 million yuan in 2019 and 6.5 million yuan in the first half of this year, with a net interest rate of nearly 10%. We believe that this is due to the significant increase in the company's LCP production load, year-on-year shipments of + 48.7%, and PTFE volume. According to the announcement, during the reporting period, the company completed the process optimization of resin materials for LCP film, and cooperated with downstream customers to complete the film preparation and electrical and mechanical properties and other indicators of testing, film product performance reached the existing imported LCP film product level. In addition, the company's high-frequency PCB board uses PTFE film material to achieve stable and quantitative production, and the related products have the characteristics of low dielectric constant, low dielectric loss, high performance stability and consistency.
5G uses LCP and PTFE materials at the high end and has a wide range of applications. The company will seize the opportunity of import substitution and jointly develop with customers. Product sales will benefit from growth, and profitability is expected to continue to improve.
Chongqing special materials project is the next bright spot of the company. The company plans to invest 500 million yuan to build 10, 000 tons / year high-performance polyamide and 10, 000 tons / year high-performance polysulfone products in Chongqing, with a construction period of two years. According to the announcement, the construction of the Chongqing project has started. The company will make use of the location advantage of Chongqing to realize the industrial layout in South China, East China and Southwest China. At the same time, the project products will form coordination with the company's existing special engineering polymer materials to achieve import substitution and improve the company's competitiveness.
Investment suggestion: buy-An investment rating, we expect the company's net profit from 2020 to 2022 to be 0.53,0.60 and 66 million yuan respectively.
Risk hint: the demand is not as expected; the project construction is not as expected.