Xinhecheng (002001) 2019 Third Quarterly Report Review： Weak short-term product prices are bullish on long-term growth space
Xinhecheng (002001) 2019 Third Quarterly Report Review: Weak short-term product prices are bullish on long-term growth space
Core point of view Due to the weak price of vitamins and other products, the company achieved net profit in the first three quarters of 2019.
06 percent billion, -32.
Considering the expected price increase of products and the release of capacity under construction, we are optimistic about the elasticity of performance in 2020; the company is at the starting point of a new round of product expansion. It is expected to take a step forward in the future and be optimistic about long-term growth space.
The EPS for 2019-21 is forecast to be 1.
86 yuan, given a target price of 27 yuan, maintain “Buy” rating.
Vitamin prices were weak in the third quarter, and net profit was attributable to moms.
As the price of vitamins, flavors and fragrances dropped by half, the company achieved operating income of 57 in the first three quarters of 2019.
660,000 yuan, at least -14.
2%; net profit attributable to mother 17.
06 percent billion, -32.
From the single quarter of the third quarter, the downstream demand for vitamins was weak, and product prices fell month-on-month but still higher than the same period of the previous year; the company achieved operating income in the third quarter.
9.8 billion, -6.
6% a year -8.
2%; achieve net profit attributable to mother 5.
5 billion, -14.
7%, +5 per year.
Feed demand is slowly picking up, optimistic about the expected increase in vitamin prices.
With the slow improvement of pig farming, it is expected that the demand for nutritional additives such as feed and vitamins will pick up.
Among them, the price of vitamin E is currently at a historically low level. In the breakthrough of DSM integration of Nent technology, the industry’s competition pattern is expected to be better, and the price is expected to be elastically restricted.
With the coming of the hog restocking cycle in the future to increase feed demand, the price of vitamins is expected to enter an upward channel. As the domestic VA, the VE leader 杭州桑拿养生会所 has fully benefited.
As new product expansion progresses, we are optimistic about long-term growth space.
The company announcement and the environmental impact assessment of related subsidiaries show that the company plans to invest a total of nearly 20 billion US dollars in the next 2-3 years to expand production capacity and reserve new products, mainly involving methionine, biological fermentation products, nutrition products and fine chemicals.
The company’s technological advantages and strong cost control capabilities are the core factors to ensure the smooth release of new production capacity. We are optimistic about the future release of new products and the gradual release of performance, and the company’s profit scale is expected to reach another level.
Risk factors: falling product prices; increased competition in the industry; less-than-expected release of new capacity / new products; risk of production safety accidents.
Investment suggestion: In the short term, taking into account the expected price increase of vitamins, methionine, and the gradual release of new materials, methionine and other production capacity under construction, the company’s performance in 2020 is expected to achieve rapid growth; in the long term, the company is at the starting point of a new round of product expansion.The scale of performance is expected to rise again.
Due to weaker demand for feed in the short term, vitamin prices have risen below expectations, lowering the company’s net profit forecast for mothers to 2019 to 23.
9.7 billion (previous forecast was 28.
900,000 yuan), the corresponding EPS is 1.
According to estimates from comparable companies, we will give 25 times PE in 2019, corresponding to a target price of 27 yuan (original target price of 30 yuan), and maintain a “buy” rating.