Zhejiang Longsheng (600352) Annual Report 2018 Review: Progressive and Strict Supervision, Long-term Benefits to Good Dye Leaders
The company is a domestic leader in dyestuffs, with complete industrial chain support. Due to the impact of the explosion in northern Jiangsu, the dyestuff industry has re-entered a tight balance between supply and demand. The company is expected to fully benefit from the improvement of the industry’s prosperity. It is expected that EPS for 2019-2021 will be 2.
43 yuan / share, maintain target price of 25 yuan, maintain the “buy” rating product prices rose, and gradually produced a significant improvement.
The company achieved revenue of 190 in 2018.
76 trillion, ten years +26.
32%; net profit attributable to mother 41.
11 trillion, +66 for ten years.
In Q4 2018, single-quarter revenue was 45.
09 thousand yuan, ten years +16.
07%; achieve net profit attributable to mother in a single quarter9.
33 trillion, +55 a year.
The company’s performance has grown rapidly, mainly due to environmental protection, safety supervision is trending downwards, and a large number of dye companies have stopped production and stopped production, which has led to tight supply in the industry and high product prices. The company has significant environmental advantages.
The supply and demand pattern has been tight for a long time, and leading enterprises have fully benefited.
The company has a dye capacity of 30 free radicals (including disperse dye 13 starting, reactive dye 5 inserting), intermediate capacity 10 substitutes (including m-phenylenediamine 6).
5 toluene, resorcinol 3 additive), the same fashion 厦门夜网 has 2 called H acid, 2 para-ester project is under construction.
In 2018, the company’s global dye sales were 24.
19 for the first time, with intermediate sales of 10.
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.
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 淡水桑拿网 Huangshan Road Project.
The Huaxing New City project actively cooperated with the Jing’an District government to do a good job in the demolition work. All residents have been relocated, the overall design plan has been initially completed, and it has been incorporated into the Jing’an District’s major start-up projects in 2019.
The Datong base project started construction in July and is expected to start pre-sale in 2020.
The first phase of civil construction and installation of the Huangshan Road project has been completed 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 domestic dye leader. It is expected that it will benefit the most from the recovery of the industry’s prosperity and product price increases. We are fully optimistic about the company’s future performance and maintain the company’s net profit forecast for motherhood in 2019-2021 to 65.
1 ppm (supplementary forecast for 2021), corresponding to an EPS of 2.
43 yuan / share.
The chemical business is given 12 times PE in 2019, corresponding to a market value of US $ 77.7 billion, and the real estate business is allocated a corresponding market value of 4 billion according to DCF. The company’s target total market value is 81.7 billion and the corresponding target price is 25 yuan. Maintain the “Buy” rating.