Hongda Xingye (002002) 2018 Annual Report and 2019 First Quarterly Report Comments: Chlor-Alkali Storage Pressure Performance Has Been Optimized by Long-term Development

Hongda Xingye (002002) 2018 Annual Report and 2019 First Quarterly Report Comments: Chlor-Alkali Storage Pressure Performance Has Been Optimized by Long-term Development
The company’s product price center is expected to rise, while its own high-quality production capacity is under construction, and its performance has helped in the long run, and it is optimistic about the company’s long-term development.Reduce the company’s net profit forecast for mothers in 2019/20/21 to 7.02/8.36/10.01 ppm, maintain target price of 10 yuan, maintain “Buy” rating. Product prices fell, and net profit attributable to mothers declined in 2018.The company’s operating income in 2018 was 60.4.5 billion, down 7 every year.58%; net profit attributable to mother 6.11 trillion, down 39 a year.twenty one%.In terms of quarters, the four quarters of income and net profit attributable to mothers were: 14.13/15.23/13.86/17.2.2 billion and 2.52/1.68/2.45 / -0.5.4 billion.From the income statement, the four expenses are relatively stable, which was 10 in 2018.2.3 billion, compared with September 2017.The value of 9.2 billion US dollars only increased by about 3,000 million. The decline in performance was mainly due to the decline in the volume and price of major products. Among them: PVC, PVC products, and several rare gross margins decreased significantly from 2017 (23%).300 million. In the first quarter of 2019, net profit attributable to mothers declined, and operating cash flow improved.Company revenue in 2019 14.0.5 billion, down by 0 every year.58%, net profit attributable to mother 1.90 trillion, down 24 a year.61%, it is expected that it will still be affected by the drop in the price of chlor-alkali products.However, the operating cash flow has improved from the previous quarter, mainly due to the higher business prosperity of the current period. The company increased the sales repayment efforts, and the sales recovery was better. At the same time, the bank acceptance bills received during the current sales period, butBank deposits obtained at discount.We estimate that although the current overall revenue performance is affected, it will translate into a rebound in volume and price of products in 2019, and the company’s overall plan to achieve operating income of 8 billion US dollars (equivalent to an increase of 32).34%) can still be achieved. New PVC production capacity continued to advance, and application materials for convertible bonds were exempted.The company completed the announcement on the conversion of convertible bonds in December 2018, and the scale of the public offering is not to exceed 24.500 million convertible bonds, of which 2.3 billion were used for the construction of “30 polyvinyl chloride and supporting projects per year”, 1.$ 500 million to supplement working capital.In March 2019, the application materials for the issuance of convertible corporate bonds have obtained a copy of the China Securities Regulatory Commission.After the completion of the aforementioned investment projects, the company will have a total of 100 tons of PVC production capacity, further expand the company’s output of PVC, caustic soda and other products, consolidate the advantages of scale, and improve profitability. Focusing on the chlor-alkali industry chain, we actively promote hydrogen energy business.The company continues to extend the industrial chain around the chlor-alkali industry chain. Recently, the company has actively promoted the development of hydrogen energy projects by taking advantage of self-produced carbon fluoride.The company announced in December 2018 that it is planning to build a hydrogen refueling station to improve the utilization efficiency of the production flow of chlor-alkali plants. The total investment of a hydrogen refueling station is 26.46 million yuan. It is expected to have an annual income of 10.8 million yuan and an average annual profit of 5.63 million yuan.In January 2019, Wuhai City approved the company to build a total of 8 hydrogen refueling stations in Wuhai.On February 18, 2019 and April 23, the company respectively cooperated with Beijing Aerospace Test Technology Research Institute and Xiongchuan Hydrogen Technology Demonstration Project to conduct hydrogen energy related technologies, equipment development, and operation management. Risk factors: rising raw material prices; falling prices of PVC and caustic soda; new projects put into operation are less than expected. Profit forecast and estimation.Due to the limited increase in the total domestic chlor-alkali production capacity, the supply of limestone raw materials has tightened, the company’s product price center has continued to rise, and its own high-quality production capacity is under construction. The performance has been helpful in the long term, and it is optimistic about the company’s long-term development.Taking into account the short-term product price pressure, the company’s 2019/20/21 net profit return to mother is reduced to 7.02/8.36/10.10,000 yuan (the original 北京夜网 forecast for 2019/20 was 14.71/16.12 ppm), the corresponding EPS is 0.27/0.32/0.39 yuan, maintain target price of 10 yuan (corresponding to 37/31/26 times in 2019/20/21 respectively), maintain “Buy” rating.