Taihe New Materials (002254) Annual Report and 2019Q1 Quarterly Report Comment: Benefit from Aramid Volume and Price Rise
Event: The company released its 2018 annual report and achieved operating income of 21 in 2018.
720,000 yuan, an increase of 39 in ten years.
72%; net profit attributable to mother 1.
56 ppm, an increase of 56 in ten years.
25%; basic profit income is 0.
26 yuan / share, an increase of 62 in ten years.
2018Q4 realized operating income6.
$ 10.2 billion.
64%, an increase of 4 from the previous quarter.
88%; net profit attributable to mother 0.
1.5 billion, down 50 a year.
87%, down 63.
The company released the 2019Q1 quarterly report and achieved operating income6.
560,000 yuan, an increase of 49 in ten years.
86%, compared with 8.
97%; net profit attributable to mother 0.
41 ppm, an increase of 14 in ten years.
75%, an increase of 173 from the previous month.
Key points of investment: The spandex industry is still consolidating, and the bottom is expected to recover. The company’s differentiation and park development ushered in new opportunities.
At present, the domestic spandex industry is generally in excess. According to the company’s annual report data, the total spandex production capacity in China reached 78 in 2018.
6 Initially, the annual increase was about 11%; the apparent domestic demand for spandex was only 58.
5 Growth rate, 10% annual growth.
More new production capacity than backward production capacity withdrawn, the problem of oversupply is still prominent, and the industry’s profit has shown a downward trend compared with the same period.
In 2019, it is expected that the domestic spandex production capacity will reach 86 inches, with an apparent demand of about 64, and oversupply will still be maintained in the short term.
However, with the continuous advancement of environmental protection and park-based policies, some small production capacity is expected to accelerate the withdrawal, and the industry’s supply and demand tends to be balanced.
In 2018, the company’s spandex business brought in revenue12.
380,000 yuan, an increase of 30 in ten years.
59%, accounting for about 57 of total revenue.
00%; but gross profit margin from October 2017.
93% reformed to 2.
21%, mainly due to the fluctuations in the increase in the price of raw materials and the trial production of Ningxia Yuehua. Long commissioning cycles brought high costs, which led to a decrease in the company’s spandex business in 2018.
The company’s existing spandex production capacity4.
5 Lowest price / year, the company plans to expand the construction of dual bases in the next five years, and plans to construct a high value-added exchange-spandex project in the chemical park of Yantai Development Zone. The current phase is 1.
The annual production capacity for 5 years / year is under construction. At the same time, in Ningxia, where the price of production factors is relatively low, an expansion strategy is implemented, and the industry is actively involved in restructuring.
After the construction of the new park is completed, the company will shut down the existing headquarters4.5Minimum income per year, to withdraw from the city and enter the park.
It is expected that the price of spandex raw materials will decrease in 2019, and the company’s spandex business is expected to turn losses into profits.
Aramid downstream demand is strong, and the market space is broad in the future. As the domestic aramid industry leader, the company has successfully promoted business transformation and its performance development has entered a fast track.
Aramid products are mainly used in composite protective clothing, aerospace, fiber optic reinforcement, and automotive industries.
Initially the company gradually expanded downstream channels and made progress in a number of areas, such as forest fire protection clothing and soldier training clothing.
At present, the domestic aramid production capacity is limited, and downstream demand continues to increase, product supply and demand are sought, and sales prices are on the rise. The aramid market still has broad room for growth.
The company is the first domestic enterprise to achieve mass production of aramid, with an annual production capacity of 7000 tons of meta-aramid, and an annual production capacity of 1,500 tons of para-aramid, which ranks first in the country.
Affected by rising raw material prices and tight supply and demand in the aramid industry, the company’s aramid sales price continued to increase, the production line was running at full capacity, and output, sales and profit levels increased.
In 2018, the company’s aramid business brought in revenue9.
180,000 yuan, an increase of 56 in ten years.
12%; 42% of total revenue.
27%, an increase of about 4 over the same period.
5 averages; gross margin is as high as 37.
41%, an increase of about 11 over the same period.
Nine levels 武汉桑拿 have become the company’s main business of contributing profits. The company successfully promoted the business development performance into the fast track.
The company’s aramid production capacity will continue to expand, accelerating the process of domestic substitution.
At present, the domestic demand for aramid is still limited, and imports as an important strategic material, the localization of aramid is imminent.
Taihe New Materials released the “Development Plan for the Next Five Years”, which will expand and expand the meta-aramid and the annual production capacity of para-aramid in the plan.
2. Achieving meta-aramid and para-aramid with an international market share of 25%, 10%, and a domestic market share of 60% and 40%, developing into one of the world’s leading aramid companies.
On July 21, 2018, Taihe New Materials started the construction of a high-performance para-aramid project with a capacity of 3,000 tons per year in Ningxia. Trial production is expected to take place in the first quarter of 2020. At present, the basic project has been completed.
In addition, the company will promote Yantai’s 8,000-ton / year aramid project in 2019, and it is expected to start production in 2020.
By then, the company’s meta-aramid production capacity will reach 1.
5 tons / year, the para-aramid production capacity will reach 4,500 tons / year, and the leader will be further increased and consolidated.
Profit forecast and investment rating: As the aramid leader, the company will continue to benefit from the high growth of the aramid industry and the trend of import substitution; the company’s spandex and aramid projects under construction are advancing steadily, but the production capacity is shifted backwards. The annual net return to mother is 2 respectively.
43 trillion, EPS is 0.
89 yuan / share, maintain “overweight” rating.
Risk warning: downstream demand is lower than expected; product market expectations are higher than expected; spandex industry recovery is lower than expected; project construction progress exceeds expectations; company product price downside risks