Shanshui Technology (301190)
Performance review
The company released the first quarter on April 27, 2022: in the first quarter of 2022, the company achieved a total operating revenue of 104 million yuan, a year-on-year increase of 19.41%, and the net profit attributable to the parent company was 24 million yuan, a year-on-year increase of 80.23%.
Business analysis
The leading advantages in subdivided fields are prominent, and the price increase of dye intermediate series products is relatively smooth. The company is a subdivided leading enterprise in the acid dye intermediate industry. The market share of its core products 6-nitrate, oxygen and 5-nitrate is more than 30%. Since the fourth quarter of last year, with the withdrawal of some low-end production capacity, the industry pattern has been continuously optimized, and the pricing power of the company as a leading enterprise has been further strengthened. From the perspective of specific product prices: in the second half of 2021, the average sales price of 6-nitrate increased by 27% year-on-year to 37600 yuan / ton, and the average sales price of 5-nitrate increased by 12% year-on-year to 75200 yuan / ton. Considering that the price increase behavior of the company is mainly concentrated in the fourth quarter of last year, according to the product quotation on the official website in October 2021, the external quotation of 6-nitrate has been increased to 60000 yuan / ton, and that of 5-nitrate has been increased to 95000 yuan / ton. The price increase range of the product is obvious. According to the performance in the first quarter of this year, the price transmission and implementation of the product are also relatively smooth.
The volume and price of main business have risen simultaneously, and the company’s performance is expected to rise steadily. From the performance of the first quarter of 2022, the company realized a net profit attributable to the parent company of 24.22 million yuan in a single quarter. Considering that the first quarter itself is an off-season, and there are also factors such as the Spring Festival holiday and park maintenance, the contribution to the income and profit of the whole year is low, and the overall performance basically meets the expectations. Compared with last year, the growth rate of parent net profit in the first quarter of this year far exceeded the growth rate of revenue. The gross profit margin of sales in a single quarter increased by 11.4% year-on-year to 40.6%. At the same time, the ability of cost control is still good, and the net profit margin of sales increased by 7.9% year-on-year to 23.4%. In the future, driven by the gradual improvement of the capacity utilization of the company’s core products and the upward price, the performance is expected to continue to improve.
Investment advice
The company is the leading dyestuff intermediate subdivision leader in China. After the optimization of the industry structure, the pricing power of the company’s products is further enhanced, and the core products begin to enter a new cycle of simultaneous increase in volume and price. We expect the net profit attributable to the parent company in 20222024 to be 241, 341 and 465 million yuan respectively, EPS to be 1.12, 1.59 and 2.17 yuan respectively, and PE to be 20.5, 14.5 and 10.6 times, maintaining the “overweight” rating.
Risk tips
The epidemic affected downstream demand and transportation, the launch of raised investment projects was less than expected, the upgrading of process technology was less than expected, the price of raw materials rose sharply, the competition pattern in the product market deteriorated, and the ban on restricted shares was lifted
