Zhejiang Longsheng (600352): Rising dyes and intermediate prices led to high performance and strived to reach new highs in 19 years

The company released its 2018 annual report: it achieved operating income of 190 in 2018.

7.6 billion (+ 26% YoY).

3%), net profit attributable to mother 41.

110 thousand yuan (+66 compared with the same period last year).

2%), net profit after deduction is 37.

4.0 billion (+102 compared to the same period last year).

64%), with Q4 operating income of 45.

09 million yuan (+16 compared with the same period last year).

1% quarter to quarter -16.

5%), net profit attributable to mother 9.

3.2 billion, net profit after deduction to mother.

2.7 billion (+72.

3% quarter-to-quarter.

3%), the performance was in line with expectations.

The high performance of the company is mainly due to the increase in dyes and intermediate prices, and gradually reducing the gross profit margin.

4%, an increase of 8 from the previous year.

6 pct, 18Q4 deduction of non-post-sales results from the previous quarter were mostly due to the fall in product prices in the off-season and sales declines.

0%, down 4 from the previous month.

6 pct.

The company intends to distribute cash dividends to all shareholders for every 10 shares2.

50 yuan (including tax), a total of 12 dividends.

9.6 billion.

The rise in the price center of dyes has promoted high performance growth.

Since the environmental protection inspection of Jiangsu and Zhejiang provinces in 2017, the dye industry has continued to improve the supply and demand pattern, especially at the end of April 2018. Due to the incident of stealing emissions, the enterprises in the park have been shut down, and the supply side has further contracted, leading to rising product prices.

The company’s dye business achieved operating income of 111 in 2018.

10,000 yuan, an increase of 21 in ten years.

5%, the average product price is 4.

590,000 / ton, an increase of 23 in ten years.

5%, sales of 24.

2 Initially, it decreases by 1 each year.

7%.

Looking at the chain, Q4 sold 5.

5 nominal, down 23 from the previous month.

6%, sales price 4.

730,000 / ton, down 0 from the previous month.

3%, we judge that the restructuring of Q4 is the traditional off-season. Some companies in the reorganized North Jiangsu Park resumed production in the fourth quarter. The downstream environmental protection margin is expected to be relaxed and the enthusiasm for procurement will decline.

The volume and price of the intermediate business went up, which became another pillar of the company’s profit.

The company’s intermediate business realized operating income in 201836.45 ppm, an increase of 62 in ten years.

7%, average product price 3.

400,000 / ton, an increase of 44 in ten years.

1%, sales of 10.

7 Initially, it grows by 12 every year.

9%. Intermediate sales increase every year. We judge that the company expanded more and more due to the previous shutdown and exit.

The main products of the company’s intermediate business are resorcinol and resorcinol. Among them, resorcinol has risen due to overseas entry and exit. The average market price in 2018 was about 10.

30,000 / ton, an increase of 56 in ten years.

2%.

Looking at the chain, Q4 sold 2 in the middle.

4 nominal, down 1.

7%, sales price 3.

600,000 / ton, down 6 from the previous month.

3%.

Mainly the off-season of the industry, the prices of resorcinol and diamine both fell.

The Tianjiayi explosion caused the supply to shrink again, and the surge in product prices helped the company’s 19-year performance to a new level.

Affected by the “321” Xiangshui Tianjiayi explosion accident in 2019, Tianjiayi’s production capacity of about 1 inserted m-phenylenediamine was withdrawn, accounting for about 20% of the domestic market. At the same time, Xiangshui Park and its surrounding coastal, Guanyun, and Guannan Parks have all ceased productionRemediation and safety inspections have been launched in various provinces and cities across the country.

At present, the supply of the m-phenylenediamine industry is tight, and the supply of dyes has contracted again, causing product prices to skyrocket.

As of April 1, the market price of m-phenylenediamine has changed from about 4 before the explosion.

50,000 / ton increased to 150,000 / ton, resorcinol increased from 90,000 / ton to 110,000 / ton, and the market price of disperse dyes increased from about 40,000 / ton to 60,000 / ton.
Benefiting from the 北京桑拿洗浴保健 substantial increase in product prices, the company’s 19Q2 performance is expected to explode again, boosting a new high in 19 years.

Investment suggestion: Maintain the “overweight” rating. Due to the substantial increase in product prices, increase the 2019-20 year forecast and add a profit forecast for 2021. It is expected that the net profit attributable to mothers will be 59-21 in 2019-21.

65 (original value 48.

70), 61.

98 (original value 56.

10), 63.

9.1 billion yuan, corresponding to EPS 1.

83, 1.

91, 1.

96 yuan, PE 10X, 10X, 10X.

Risk Warning: Dyes and Intermediate Prices Fall, Real Estate Business Is Less Than Expected