Taihe New Materials (002254): Spread of spandex prices continues to be in line with expectations

The first half of 2019 results are in line with our expectations of the company’s first half of 2019 results: revenue12.

70,000 yuan, an increase of 27 in ten years.

3%, an increase of 7 from the previous quarter.

9%; net profit attributable to mother 0.

0.94 million yuan, corresponding to a corresponding profit of 0 after dilution.

15 yuan, sixth grade 6.

3%, up 67% from the previous month.

2%, in line with our expectations.

Development trend Demand is sluggish, overcapacity, high inventory causes the bottom of spandex prices to hover, environmental protection and profit pressure in the future will accelerate industry consolidation.

At present, the price of spandex 40D is 30,000 yuan / ton, which is 13% lower than the same period of the previous year. The supply side has excess capacity and the industry inventory is high. At present, the industry inventory is 50 days, reaching a historical high.

Affected by the Sino-US trade friction, downstream demand is sluggish, prices are hovering at the bottom, spreads continue to fall, and the industry is serious.

We expect that stricter environmental protection will be realized in the future, some small production capacity will be profitable, the dual pressure of environmental protection will accelerate the withdrawal from the market, and the industry’s supply and demand structure is expected to improve.

At the same time, the company will also complete the retreat from the city and the relocation of production capacity within the next three years, further improve production efficiency and product differentiation, and consolidate the leading position.

The company plans to build a new factory in Yantai.

The 5 calibration / an average average denier spandex project completed the replacement of old and old capacity, and a new 3 calibration / annual green separation spandex project was newly built in the Ningxia plant. It is expected to be put into production by the end of 2020, and the future capacity will reach 9 indicators.

In the meantime, para-aramid donors are sought, and the volume and price of products are rising, and profitability continues to increase.

The company currently has a capacity of 7,000 tons of meta-aramid and 1,500 tons of para-aramid. It will drive at full capacity. In the next five years, the company plans to invest a total of 3.5 billion yuan to expand the meta-aramid capacity to 1.

2 nominal.

Demand in the downstream protection field is strong, product demand exceeds supply, prices have increased, profitability has improved significantly, the company’s gradual release of the company’s production capacity in the future, the further expansion of the downstream market, and optimistic about the aramid’s continued profit contribution to the company.

Earnings Forecast and Estimates Due to the continued downturn in spandex prices, we cut our net profit for 2019/2020 by 20% / 7% to 1.

70 ppm 青岛夜网 / 2.

8.9 billion.

Currently corresponds to 2019/2020 37.

2 times 21.

9 times price-earnings ratio.

We maintain our Neutral rating, but due to weak downstream demand for spandex, we lower our target price by 4.

6% to 12.

40 yuan corresponds to 44.

5x 2019 P / E ratio and 26.

2 times the 2020 price-earnings ratio, compared with 19 previously included.

7% upside.

The prices of risk products have risen; downstream demand has fallen short of expectations; and the estimated hub has moved downward.