Xinhecheng (002001): Low demand leads to lower vitamin prices than expected Q3 performance

Investment highlights: The company released the third quarter report for 2019: the first three quarters achieved operating income of 57.

6.6 billion (-14% year-on-year.

2%), net profit attributable to mother 17.

0.6 billion (-32 compared to the same period last year).

8%), net profit after deduction is 15

99 million yuan (-34 compared with the same period last year).

0%).

Of which Q3 operating income was 18.

9.8 billion (YoY -8.

2% quarter to quarter -6.

5%), net profit attributable to mother 5.

5 billion (+14 compared to the same period last year).

9% quarter-to-quarter.

4%), net profit after deduction is 5

4.3 billion (+ 30% year-on-year.

0%, QoQ -5.

6%).

The performance was lower than market expectations, mainly due to the traditional off-season incorporation of swine fever in the third quarter to affect domestic vitamin demand, and at the same time, the VE price rose less than expected.

  The drop in vitamin prices led to a decrease in revenue and gross profit margin. The weak demand in Q3 caused the performance to decline sequentially.

In the reporting quarter, the company’s revenue and net profit decreased by at least a part, mainly due to the decline in the prices of the main vitamin products VA and VE last year.About 54%, 31%; At the same time, the domestic swine fever epidemic caused a rapid decline in the number of live pigs, which adversely affected downstream feed demand.

Affected by the fall in product prices, the gross profit margin for the first three quarters of sales was 46.

8%, a decline of 9 per year.

2 pct.

In Q3, the average price of vitamins A and E in the third quarter was about 371, 49 yuan / kg, which was an increase of about 1%, 4%, and Q3 gross profit margin was 47.

3%, a small increase of 0 from the previous month.

6 pct.

However, the third quarter is the traditional off-season, and at the same time, the hog inventory has continued 成都桑拿网 to decline, and Q3 has decreased by about 20% from Q2. Therefore, the replacement amount of vitamin products is expected to decrease from the previous month, and the net profit of non-after-mother will be slightly offset from the previous month.

In terms of expense ratios, the report stated that the company’s period expense ratio was 14.

0%, an increase of 2 a year.

2 pct, in which the sales / management / R & D / financial expense ratios were increased by approximately 0.

2/0.

5/0.

4/1.

1 pct.

The financial expense rate increased rapidly, mainly due to the additional increase in the company’s index costs, which increased by about 75 million yuan, of which short-term expenses increased by 18.

3 ppm to 34.

300 million, long-term loans increased by 28 each year.

100 million to 32.10,000 yuan.

  The price 苏州夜网论坛 of VA is volatile, and the price of VE structure is expected to rebound in the long run.

Due to the high barriers of key intermediate citral and its own synthetic process, VA has maintained six companies worldwide for more than a decade, and its layout is very stable.

Due to the constant problems of old BASF equipment and the incorporation of supplies, it is expected that the price of VA products is expected to maintain a central shock of 300-400 yuan / kg.

In the VE industry, DSM acquired Nent Technology VE and related intermediate assets as expected. Nent Technology has now entered the phase of production suspension and upgrading.

  DSM’s integration of the VE industry is expected to return to the oligopoly pattern in the future, and then the impact of swine fever will gradually weaken, downstream demand will pick up, and the price of vitamin products is expected to resume its growth trend.

The company is the leader of VA and VE. Within 1 hour of VA powder production capacity, 4 VE powder production capacity is inserted. The advantage of industrial chain integration is obvious, fully benefiting from the price increase, each increase in product price by 10 yuan / kg, increase net profit by 0.

8, 3.

0 million.

  Construction in progress is growing, and continuous capital expenditure growth is the foundation for long-term growth.

The company’s construction in progress reached 79 at the end of the reporting period.

700 million yuan, an increase of 126 over the beginning of the year.

7%, an increase of 25 from the first half of the report.

9%, mainly due to the report that the long-term annual production of 25 methionine projects, the first phase of the Shandong Industrial Park project, and the construction of Heilongjiang biological fermentation project.

At present, Shandong VE project and Heilongjiang biological fermentation project have entered the trial production stage.

The company’s continuous consumption and long-term growth in the fields of nutrition products, flavors and fragrances, new materials break through the foundation, and it will stand next to the international giant DSM in the future.

  Investment suggestion: As the price of vitamins rises less than expected, the profit forecast is lowered, and net profit is expected to return to mothers in 2019-21.

50, 29.

53, 37.

10,000 yuan (original value 30.

04, 38.

84, 46.

4.2 billion), corresponding to EPS 1.

09, 1.

37, 1.

72 yuan, PE 19X, 15X, 12X.

Maintain the “overweight” rating.

  Risk reminder: Vitamin product price rises less than expected, new projects put into production progress and benefits are less than expected

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