the company released the first quarterly report of 2021, achieving a revenue of 247 million yuan, a year-on-year increase of + 49.74%, a net profit attributable to the parent company of 59 million yuan, a year-on-year increase of + 120.22% , and a net profit after deduction of non-profit of 58 million yuan, a year-on-year increase of + 112.98%, a quarterly high since listing. The reasons are as follows: 1) affected by the epidemic in the same period of last year, the growth of revenue slowed down, the domestic and foreign market demand recovered and the sales volume increased rapidly in this period; 2) China took the lead in promoting the transformation from single agent to compound agent, which was caused by the record high foreign export.
the acquisition and marketing strategy of lubricating oil additives is flexible, and the transformation of compound agents promotes the improvement of profit quality . In Q1 2021, the average price of Brent’s main contract was US $61.39/barrel, with a year-on-year increase of + 26.06% and a month on month increase of + 36.00%. Due to the company’s flexible product sales, purchase and marketing strategy, on the one hand, the company will prepare goods in advance moderately according to the price trend of raw materials, on the other hand, when the price of raw materials increases, the company will also increase the product sales price to transfer the pressure of rising costs. In the first quarter of 2021, the company’s gross profit margin reached 34.55%, with a year-on-year increase of + 2.09 PC, + 5.11 PCT month on month, with a net interest rate of 23.86%, a year-on-year increase of + 7.63 PCT, a month on month increase of + 2.33 PCT, and the quality of earnings continued to improve. The company’s net operating cash flow was -13 million yuan, a month on month decrease, which was due to the growth of the company’s product sales, the rapid increase of accounts receivable, the company’s stepping up preparation and the increase of purchase loans. In the later stage, the company will take the lead in realizing the transformation from single agent to composite agent in China, strive to reach strategic cooperation with international mainstream lubricating oil companies and realize large-scale sales.
pay attention to R & D investment and speed up API certification of compound agent . The company’s R & D expenses in 2021q1 were 7.06 million yuan, a year-on-year increase of + 106.05%. The company will further increase R & D investment, drive the R & D of single agent with the demand for composite agent, accelerate the product certification of composite agent, and strive for a breakthrough in the certification of steam engine oil, diesel engine oil, gear oil, anti-wear hydraulic oil and other products. The company’s financial expenses in 2021q1 were – 448.27% month on month, which was due to the increase of the company’s interest income.
promote the construction of raised investment projects and rapidly increase production capacity . The company will seize the advantages of Xinxiang production base, such as complete infrastructure, complete supporting projects, short construction cycle of capacity expansion and small investment. Through technical transformation, expansion and other projects, the company will realize the simultaneous development of Xinxiang and Cangzhou, rapidly improve production capacity and expand production and marketing scale.
maintain the profit forecast and maintain the “buy” rating . We estimate that the operating revenue from 2021 to 2023 will be RMB 1476 / 1966 / 2629 million respectively, and the net profit attributable to the parent company from 2021 to 2023 will be RMB 307 / 430 / 565 million respectively, corresponding to PE of 46x / 33x / 25X. With the company’s new production capacity put into operation, the promotion of single agent to compound agent and the certification of high-level compound agent API, the growth logic will be strengthened and maintain the company’s “buy” rating of .
risk tip : API certification is not as expected; Capacity digestion is lower than expected; Risk of falling demand.
（ Northeast Securities Co.Ltd(000686) ）
