Zhejiang Longsheng (600352): Third Quarter Report Exceeds Expectations Dye Boom Stabilizes and Rise

In the first three quarters, net profit increased by 22% per year, and the performance exceeded expectations. Zhejiang Longsheng released the third quarter report for 2019, and the company achieved revenue of 166.

200 million, an increase of 14 in ten years.

1%, net profit 38.

800 million (net of non-net profit 33.

800 million), an increase of 22 in ten years.

1% (after deducting non-depreciation, increase by 9.

9%), lower than expected results.

Press 32.

According to the latest equity calculation of 5.3 billion shares, the corresponding EPS is 1.

22 yuan.

Among them, Q3 achieved revenue of 69.

7 trillion, an increase of 29 in ten years.

2%, net profit of 13.

500 million (after deducting non-13.

3 ‰), an increase of 2 in ten years.

3% (increased by 5 after ten years of deduction).

6%).

We expect the company’s EPS for 2019-2021 to be 1.

75/2.

02/2.

24 yuan, maintain “Buy” rating.

In the middle, the performance of the first three quarters improved, and the decline in dye prices caused Q3 earnings to narrow significantly. In the first three quarters, the company’s average sales price rose 31%, sales volume fell 3%, and revenue was 35.

10,000 yuan (+ 30% year-on-year), driving performance improvement.

The average sales price of dyestuffs increased by 6% per year, but due to the relocation of production capacity at the Dao retirement plant (new production capacity has been put into production), sales fell by 12% to 16.

5In the beginning, revenue was downgraded to 6% to 79 in ten years.

900 million.

In addition, the company’s Datong Real Estate project recognized part of its revenue (about 2 billion yuan) in Q3.

After the Xiangshui explosion accident, the increase in dye prices penetrated, but due to weak demand in the downstream market and part of the increase in production capacity, product prices fell at a high level in Q3, and the company’s quarterly average price of dyes fell 29% to 4 from Q2.

1 million / ton, resulting in a significant narrowing of earnings.

The company’s gross profit margin was 41 in the first three quarters.

6% downgraded by 4 per week.

3pct, where Q3 gross margin is 34.

1%, ring than epoxy 15.

5 points.

Government subsidies and investment income help profit growth The company’s period expense ratio has decreased year by year2.

1 point to 15.

0%, of which the financial expense rate is downgraded in ten years.

9 points to 1.4%, mainly due to a decrease in interest expenses; the sales / management / R & D expense ratio decreased by 0.

8/0.

1/0.

3 points.

Investment income of the company in the first three quarters4.

77 million (+ 229% year-on-year), mainly due to changes in the fair value of financial assets held, disposal of PE project income and dividends

In addition, the company received government subsidies3.

6.4 billion yuan, mainly from compensation for relocation (compared to zero last year).

4.5 billion), which also helped the performance.

According to Zhuochuang Information, the transaction price of dispersed black ECT300% / reactive black WNN in East China was 30/23 yuan / kg respectively in the middle of the middle.”Double Eleven” e-commerce apparel stocking has started. Recently, the dyeing factory order situation has significantly improved, and the overall dye inventory is low, and the product price has continued to rise gradually.

In the middle, resorcinol prices are generally strong, with the latest offer at 11.

90,000 yuan / ton, up 5% from the beginning of September.

Real estate project progresses steadily According to the company’s announcement, the real estate project is progressing smoothly. The Huaxing New Town project has obtained approval from Shanghai Jing’an District and is gradually optimizing the overall design plan. The Datong base project and the first phase of the Huangshan Road project have entered the closing stage and are in progress2019年 年底开始陆续确认收入,对公司业绩形成一定补充。
Maintain “Buy” rating. Due to weak demand for dyes and product prices exceeding expectations, we lowered the 合肥夜网 company’s profit forecast for 19-21 to 57/66 / 7.3 billion (originally USD 65/72 / 7.7 billion), corresponding to EPS1.

75/2.

02/2.

24 yuan, based on a comparable company’s average PE of 19 times in 19 years, considering the advantages of the entire industry chain, giving the company 10-12 times PE in 19 years, with a target price of 17.

50-21.

00 yuan (original value of 17.

91-21.

89 yuan), maintain “Buy” rating.

Risk reminder: downstream demand does not meet expected risks, and environmental protection policy implementation efforts do not meet expected risks.