Taihe New Materials (002254) 2019 Interim Review: Aramid supply and demand continue to slump

Taihe New Materials (002254) 2019 Interim Review: Aramid supply and demand continue to slump

Event: On August 17, 2019, Taihe New Materials released its 2019 Interim Report: the company achieved revenue 12 in the first half of 2019.

69 ppm, an increase of 27 per year.

29%; net profit attributable to mother is 0.

9.3 billion, down 6 every year.

33%; Estimated increase in average net asset income by 4.

27%, a year down -0.

56 units.

Comments: 1. The net profit attributable to the mother for the half year in 2019 is -6.

33%, slightly lower than expected in the 2019 Interim Report, the company achieved net profit attributable to mother 0.

9.3 billion, down 6 a year.

33%; of which, net profit attributable to mothers was zero in the second quarter of 2019.

53 trillion, a year down 0.

1.2 billion (-18.

01%).

120,000 yuan (+29.

27%).

The company’s 19H1 performance has declined, only due to the impact of factors such as increased spandex production capacity release in the first half of 2019, and Sino-US trade friction. The downstream weaving market continued to slump, spandex prices continued to rise, and the industry continued to intensify.

Even if the company shifted the focus of production and sales from the Yantai base to the Ningxia base and initially achieved the goal of stabilizing production and reducing costs, but because the production facilities at the Yantai base were relatively old and the products of the Ningxia base were still being promoted, the spandex business could not be overcome.
At the same time, the company’s financial expenses for 19H1 increased by 318 per year.

6% (increasing the loan interest rate of the Ningxia Park Project), and the asset impairment loss increased by 331 again.

46% (decreased spandex price, accrued inventory loss), also dragged down the performance, resulting in slightly higher performance than expected 2, aramid volume and price rose, the economy is rising, the performance is expected to continue to grow, the current global aramid market size is about 12.
Among them, the meta-aramid market size is 4 indicators, and the global para-aramid market size is 8 indicators.

At present, the domestic demand for para-aramid is about 1 ton, and the actual production capacity is only 2,000 tons. The para-aramid market has a large gap and high import dependence.

The aramid market has a high degree of biology. Taihe New Materials has long-term supply of high-performance bays (7000 tons of production capacity), para-aramid (1500 tons of production capacity), the leading choice in the domestic aramid industry.

In 2018, the company added 6,000 tons / year para-aramid project, 3,000 tons / year high-performance para-aramid project (currently under construction); 2019 added 8,000 tons / year high-performance para-aramid project for protection.
It is planned that the production capacity of para and aramid will reach 1 in the next five years.

2 Baseline (including replacement of old capacity).

Further increase market share.

3. The reshuffle of the spandex industry has continued to accelerate. The expansion of leading enterprises and the withdrawal of small enterprises have been carried out in 2017. The continuous production capacity of the spandex industry has been cleared in 2017. The spandex is still in the consolidation period in 2018-19.

With the implementation of the coal-to-gas policy in the east, coastal companies are facing pressure to withdraw from the city and enter the park.

The company is the first spandex manufacturer in China, with a current 苏州夜网论坛 capacity of 75,000 tons.

The company’s five-year spandex plan is planned to form a spandex capacity of 9 nominal exchange rates per year (old 4).

5 Potential production capacity will be eliminated), and annual sales income of about 30 will be achieved after reaching the production capacity.

800 million, with a total profit of about 4.

600 million.

Its 15,000 ton / year crude denier spandex project and 30,000 ton / year green decomposed spandex project will start construction in the third quarter of 2019, and will be put into trial operation at the end of December 2020.

It is expected that the company will eliminate the final 4 by the end of 2020.

5 Formaldehyde spandex production capacity, spandex production capacity remains at 7.
5 nominal, but the cost will be significantly reduced and profitability enhanced.
4, the company’s future industrial layout-“dual base” cost difference between the eastern and western parts of the company, the company readjusted the industrial layout.

The company established Ningxia Taihe, a subsidiary in Ningdong, and completed the acquisition of the spandex business of Yuehua New Materials. It is currently in the product promotion stage and mainly produces large batches of products.

In response to a series of changes in the spandex industry, the company plans to implement dual-base construction, acquire new land in the chemical park in Yantai Development Zone, aim at the world-class level, implement new park construction, and build 3 additional high-value-added decomposed spandex projects to promote differencesImprove the efficiency of chemical products, scale up, and increase efficiency.

5. Investment rating and estimation: It is estimated that the net profit attributable to the mother in 2019/20/21 will be 2 respectively.

15/3.

20/4.

2.1 billion, PE is 29.

41/19.

76/15.

02 times, give “recommended” rating.

6. Risk reminder: the price of spandex products fluctuates; the operating costs rise; the risk of acquisition of asset integration.