Pritt’s (002324) 2019 performance revision opinion: modified plastics usher in a turning point in performance 5G new materials business is expected to erupt
Event: On January 11th, Pritt issued a 佛山桑拿网 notice on the revision of 2019 performance: it is expected to realize net profit attributable to the parent company in 20191.
20 ‰ per year, + 130% -180%, of which net profit is 0 in 4 quarters.
9 trillion, ten years ago + 267%-375%, chain + 23%-73%.
The company’s production and sales in the second half of 2019 improved compared with the first half and the same period last year. The price of raw materials did not increase compared with the first half of 2019. At the same time, the operating performance of American companies was good.
Key points of investment: The leading domestic modified plastics for automobiles has ushered in a cycle turning point.
The company is a leader in domestic automotive modified plastics, with a cumulative capacity of 45 in Shanghai Qingpu, Zhejiang Jiaxing, Chongqing, the United States and other places. The forward capacity has been expanded to 60 tons. It has cooperated with many major auto companies around the world: BMW, Mercedes, GM, Ford, SAIC, Geely, BYD and so on.
The raw materials of modified plastics are mainly petrochemical products such as PP, ABS, PC, and polyurethane, which have a high correlation with crude oil prices.
Since 2017, the additional supply side of crude oil prices has driven up the price of raw materials and the slump in car sales. Under the squeeze of both ends, the company’s gross profit margin has fallen sharply, from Q4 to 13 in 2018.
3% historical low.
Beginning in Q3 2019, after the decline of petrochemical raw materials, the company’s single quarter gross profit margin returned to 19.
It is expected that automobile sales will gradually pick up in 2020, and the prices of bulk raw materials will continue to be low, and the company will usher in a cycle turning point.
The demand for LCP antennas driven by 5G is increasing, and the company is expected to realize the industrialization of thin films.
LCP materials have the characteristics of low dielectric constant, low frequency transmission loss, and operating bandwidth. They are very suitable for 5G mobile phone antennas, replacing traditional PI substrates and improved MPI materials.
In terms of quantity, in 4G mobile phones, the mainstream is still 2x2MIMO antenna configuration (a small number of flagship machines use 4x4MIMO).
In 5G mobile phones, 4×4 or 8x8MIMO will become standard, such as Huawei’s Mate30 series, which integrates 21 antennas.
And in the past 3 years, there has been little growth in the amount of smartphone expansion, and 5G itself will increase the amount of mobile phone displacement.
The LCP industry chain is: resin-film-FCCL-flexible board, in which the resin connection is replaced by Japanese Polyplastics, Sumitomo Chemical, Serrani and other companies. The main domestic manufacturer is Pulit, with a capacity of 2,500 tons; multiple Japanese manufacturers of filmsIncluding Murata, Kuraray and Sumitomo.
Poly-Kuraray (blown film) -Panasonic electrician combination, Poly-Murata (double pull) is currently the most successful combination on the market.
The company researched and developed LCP in 2007, and put into production of 2,500 tons of LCP resin in 2013. At present, the downstream film products are being researched and developed, and it is expected to supply for domestic mainstream mobile phone manufacturers.
It is planned to acquire Dorsett Group and enter the light stabilizer industry.
In September 2019, the company announced that it intends to acquire Dorsett Group in cash and a non-public offering at a transaction price of 10.
7 trillion, the number of shares issued is not higher than 20% of the capital of the listed company before the issue, and the performance commitment for 2020-2022 is 0.
1 and 1.
Dorsett Group is the leader of domestic UV absorbers and the upstream supplier of the company’s modified plastics. After the merger, the upstream and downstream synergies are significant.
Dorsett Fujian’s new plant is expected to start new production1.
Phase 5, one of which will be put into production from 1 to 2020, and the company’s growth space will be expanded after the completion of the merger and acquisition.
Earnings forecast and investment rating: Covered for the first time, giving a “buy” rating.
The company is a leader in modified plastics for automobiles. The acquisition of Disheng enters the light stabilizer industry and the growth space is expanded, while the LCP business opens the company’s growth space.
According to the principle of prudence, we will not consider the impact of non-public offerings on the company’s performance and equity for the time being. It is expected that the EPS for 2019-2021 will be 0.
67 yuan / share, corresponding to 42 PE.
1,33.2 and 21.
Covered for the first time and given a “Buy” rating.
Risk warning: The price of raw materials fluctuates greatly, the automotive industry is less than expected, the development of LCP is less than expected, and the acquisition of Dorsett Group is less than expected.