Xinhecheng (002001): First-half results meet expectations and VE industry integration is worth looking forward to
Investment Highlights Performance Summary: The company achieved operating income in the first half of 201938.
6.7 billion, a decrease of 16 per year.
85%; net profit attributable to mother 11.
5.6 billion, down 43 each year.
Performance in line with expectations, Q2 single-quarter increase of 26%.
The decline in 19H1 performance was mainly due to the drop in vitamin prices. The average price of 19H1 VA was 374 yuan / kg, a continuous decline of 65%, and the average price of VE was 43 yuan / kg, a decrease of 48%, resulting in a decline in the gross profit margin of nutrition products.
74 up to 59.
Flavor essence gross margin drops 15% to 5 per year.
The company’s new material production capacity was quickly released to achieve revenue3.
1.2 billion US dollars increased by 116%, costs further reduced through load increase, gross profit margin increased by 9.
46 averages to 27%.
From the single quarter of 19Q2, the performance was 6.
4.5 billion chain increased 26%, of which the average price of VA, VD3 stabilized, VE average price increased, the gross profit increased by 91 million.
In addition, interest and wealth management income increased, Q2 financial expenses decreased by 34 million, and investment income increased by approximately 70 million.
VA maintained a high level of prosperity, and VE’s profit increased and repaired.
The BASF plant started less than expected. At the same time, the cooling tower failed again in June, 西安耍耍网 and global VA supply was tight. We expect the VA price to rise steadily.
In the March quarter of 2019, it is expected that DSM’s integrated VE business will land, and the industry CR4 will reach 90%. VE plans to gradually enter a reasonable profit range. At the same time, NET 4 VE devices have rectification plans, and the market supply is expected to decrease.
The company’s VA and VE production capacity are about 1, 4 indexes, the prices have increased by 50 yuan / kg, 10 yuan / kg, and the performance has increased by 400 million, 3 respectively.
The 10 initial methionines will contribute significant performance gains.
Global methionine oligo head competition, CR4 is 87%. In 2018, domestic net imports of methionine were 14.
The price of methionine was replaced from 5 million tons / ton in 2015 to now.
80,000 tons / ton historical bottom.
The company independently developed the methionine production process. It successfully operated a 5-ton capacity in 2017 with a competitive cost. It is expected to increase by 10 years in 2019 and another 15 tons in 2021. The project’s commissioning will bring significant performance value added to the company.
The reserve projects are abundant and open up room for growth.
Several projects will be completed and put into operation at the end of 2019, including the first phase of Heilongjiang Province’s biological fermentation project, the first phase of the Shandong Industrial Park project, a 10-ton methionine project, and a 3,000-ton maltol, etc. It is expected to contribute profits in 2020 and ensure the company’s future growth.
Earnings forecasts and investment advice.
It is expected that the net profit attributable to mothers will be 25 in 2019-2021.
2.2 billion, corresponding to 17, 15, 13 times the corresponding PE.
The size of VE has improved, and the economy is improving. Several projects of the company are about to be put into production, and there is a lot of room for growth in the future. Maintain the “Buy” rating.
Risk warning: The project may be put into production less than expected; the price of vitamins significantly reduces the risk.