Zhejiang Longsheng (600352) 2019 Interim Report Comment: Dye Leader’s Advantage Significantly Rising in First Half
The company is a domestic dyestuff leader, with complete industrial chain support. The dyestuff industry is operating at a tightly balanced supply and demand, and the product price is running at a high level. It is expected that the company will fully benefit. At the same time, the company’s property business will contribute to rich cash flow, maintaining a target price of 25 yuan.”Buy” level.
Supply in the dye industry is tight, and the growth in the first half of the year has increased.
The company achieved revenue of 96 in the first half of 2019.
4.9 billion yuan, +5 per year.
25%; net profit attributable to mother is 25.
32 ppm, +36 a year.
Company Q2 achieved revenue of 48.
7.8 billion, +2 MoM.
24%; realized net profit return to mother 12.
7 billion, +0.
The first half of the company’s performance increased, mainly due to the company’s dye and intermediate volume and price rising, and even Sino-US trade friction made downstream demand weak, but the industry supply is still tight, product prices are running high, the company’s environmental protection advantages are significant, the production process is well controlled,Profits rose under the rise.
The supply and demand pattern has been tight for a long time, and leading enterprises have fully benefited.
The company has a dye calcium carbonate of 30 mm and an intermediate capacity of 11 inches. The company also has 2 crystals of H acid and 2 crystals of para-esters under construction.
In the first half of 2019, the company’s global dye sales volume10.
13 for the first time, with intermediate sales of 5.
58 is the lowest.
Affected by the North Jiangsu bombing this year, a significant gap in m-phenylenediamine supply has occurred and prices have risen sharply.
Under the continuous fermentation of the event, it is expected that the supervision will be stricter in the future, and the scale of supply and demand in the industry is expected to be tight for a long time, which will increase the price of dyes.
In the first half of the year, the national dye output fell by 28 each.
27%, the yield of intermediate crops decreased by 11.
As the industry leader, the company has a complete industrial chain and is expected to fully benefit from rising dye prices and enjoy market dividends.
The real estate business is progressing smoothly and is expected to contribute a substantial cash flow in the future.
The company focuses on Shanghai Huaxing New Town Project, Datong Base Project and Huangshan Road Project.
The Huaxing New City project actively cooperated with the Jing’an District government to complete the demolition and completion work, and has obtained the approval for the partial adjustment of the Jing’an District regulatory detailed plan in Shanghai.
The Datong base project is expected to start pre-sale in 2020.
The first phase of the Huangshan Road project is in the process of final inspection and acceptance to ensure real estate delivery and revenue recognition in 2019.
Risk factors: Environmental protection and safety inspections are less than expected; downstream demand for dyes is weak; real estate boom drifts.
Investment suggestion: The company is a leading domestic dyestuff company. It is expected to benefit from the high degree of prosperity of the industry at the same time. At the same time, the real estate business is also expected to contribute rich cash flow. We are 南宁桑拿 fully optimistic about the company’s future performance and maintain the company’s EPS forecast for 2019-2021 to 2.
43 yuan / share, maintain target price of 25 yuan, maintain “Buy” rating.