22Q3's annual performance fell by 42.6%, maintaining its "overweight" rating.
Zhejiang Longsheng released its three-quarter report on October 29, saying that in the first three quarters of 22, the revenue of yoy+6.8%, was 13.42 billion yuan, the net profit of yoy+6.8%, was 1.73 billion yuan, yoy-42.6%; the revenue of Q3 was 4.35 billion yuan, an increase of 4.7% over the same period last year, and the net profit of returning mother was 300 million yuan, down 37.7% from the same period last year. Considering the weak downstream economy, we downgrade the product sales assumption of the company in 22-24 and the profit and loss hypothesis of fair value change in 22-23, and lower the EPS of 0.70 and 0.94 PE in 22-24 (the previous value is 0.96 PE), combined with the valuation level of comparable company (14 times the average PE of 22-year 13XPE), and give the company 22-year 13XPE. Corresponding to the target price of 9.1 yuan (the previous value is 12.48 yuan, based on 22-year 13XPE), maintain the "overweight" rating.
Dye downstream demand is weak, fair value changes significantly drag down the performance reporting period, the company's main business dye downstream terminal demand decreased, industry profit margins declined. In terms of segment, the income of dye / auxiliaries / intermediates business in the first three quarters of 22 years was 68.6 yuan 7.6 / 3.05 billion yuan respectively, with year-on-year changes of-1.7%, 6.0%, 6.2%, 17.7%, 4.7 million tons, respectively, and year-on-year changes-8.5%, 8.4%, 1.7%, and average product prices were 3.9pm, 164.7 million yuan / ton, respectively. The price of disperse dyes / reactive dyes / resorcinol / resorcinol decreased year-on-year. Due to the rising pressure on raw material costs, the company achieved a sales gross profit margin of 30.1% in the first three quarters of 22, down 8.1pct from the same period last year. In addition, the net loss of fair value changes in the first three quarters was 730 million yuan, mainly due to the decline in the fair value and equity investment income of investments such as stock PE, which greatly dragged down the overall performance.
Intermediates and dye projects have landed one after another, and the industry is expected to hit bottom and rebound. The company has more projects under construction, including an annual output of 20,000 tons of H acid, an annual output of 90,000 tons of disperse dye filter cake and a liquid dye transformation project of 60,000 tons, and an annual production capacity of 37000 tons of resorcinol, etc., which is expected to further enhance the global dominance of the company's dye business. Over the past 21 years, due to the poor demand for terminal textiles and clothing, the dye industry has been in the doldrums. according to Baichuan Yingfu, as of October 30, 22, the average market prices of disperse dyes (disperse black) and reactive dyes (reactive black) are 21.0 million yuan / ton, respectively, which are located in the 20% percentile of the historical price range since 2016, and the industry boom is close to the middle and bottom region. we think that with the improvement of domestic demand. The economy is expected to hit bottom and rebound.
Risk tips: raw material prices fluctuate sharply; production of new projects falls short of expectations; exchange rate fluctuations; downstream demand is lower than expected; cash flow of real estate business is lower than expected