Sanyou Chemical (600409) Third Quarterly Report Review: Viscose Staple Fiber is expected to resume its turning point

Sanyou Chemical (600409) Third Quarterly Report Review: Viscose Staple Fiber is expected to resume its turning point

Event: The company released the third quarter report of 2019, reporting that the combined company realized operating income of 154.

80,000 yuan, an annual increase of 3.

6%, net profit attributable to mother 5.

28 ‰, a decrease of 65 per year.

8%, deducting non-net profit 5.

2 ‰, a decrease of 66 per year.

2%; of which, in the third quarter, a single quarter of operating income of 500,000 yuan, an annual increase of 0.

96%, down 5 from the previous month.

6%, net profit attributable to mother 1.

37 trillion, down 62 a year.

4%, down 30% from the previous month.

7%, slightly lower than expected; gradually, the company announced that it plans to set up a senior management incentive fund to determine the amount of rewards based on annual net profit and return on net assets and other profit indicators.

Investment summary: The core product price declines in the first three quarters were mainly due to the expansion and decrease in performance.

In the first three quarters, the viscose staple fiber and silicone business surpassed significantly, and the soda ash business performed slightly better than the same period last year.

In the first three quarters, the company’s viscose staple fiber had a minimum tax of 10793 yuan / ton, a decrease of 14%, and an increase of 1675 yuan / ton. The main reason was that the industry increased production capacity and replaced the overall supply.

In the first three quarters, the minimum value of DMC without taxes was 16,184 yuan / ton, a decrease of 39%, and the spread spread narrowed by 8,793 yuan / ton. The main reason is that a large number of additional production capacity will be put into production successively, and the market demand is insufficient.

In the first three quarters, the soda ash is tax-free up to 1567 yuan / ton, more than ten years later5.

6%, the spread widens by 72 yuan / ton per year. The soda ash industry maintains a tight balance between supply and demand, increases production capacity, and increases market efficiency.

In the chlor-alkali business, the non-tax of PVC and caustic soda are respectively 5,970 yuan and 2,322 yuan / ton, which have 重庆耍耍网 increased separately for many times.

9% and down 14.

5%, mainly due to weaker market demand for caustic soda.

Sales of viscose staple fiber increased significantly, while sales of other products increased slightly.

In the first three quarters, the company’s viscose staple fiber sales volume was 59.

4 Initially, the annual growth rate was 50%, mainly because the company added 25 indicators per year of viscose staple fiber production capacity in the second half of last year. Since this year, it has basically maintained full production and sales, and its incremental contribution has been significant.

DMC sales of soda ash, PVC, and silicone decreased by 3 respectively.

2%, 0.

8%, 11.

4%, caustic soda is mainly for personal use.

The market for major products declined in the third quarter, which led to a decrease in performance from the previous quarter.

In the third quarter of the company’s main products, except for the prices of organic silicon and PVC rose slightly, the prices of other products fell significantly.

In the third quarter, the company’s viscose staple fiber, soda ash, and caustic soda were tax-free at a minimum of 10340 yuan, 1473 yuan, and 2200 yuan / ton, respectively, which were down 6 from the previous month.

6%, 8.

2%, 2.

1%, while PVC and DMC excluding taxes were 6,146 yuan and 16,491 yuan / ton, respectively, an increase of 1 from the previous month.

0%, 0.

6%.

In the third quarter, the company’s viscose staple fiber, soda ash, and caustic soda price differences decreased by 246 yuan, 194 yuan, and 100 yuan / ton respectively, and the caustic soda and DMC price differences increased by 25 yuan and 723 yuan / ton respectively.

The viscose staple fiber industry is expected to gradually recover, and the company’s competitive advantage continues.The viscose staple fiber industry has entered a downward cycle since the second half of 2017, especially after 2017?
After the expansion of production capacity in 2018, the overall replacement status has entered the bottom of the industry, and production capacity has been increased in the future. Some backward production capacity will withdraw, and the industry is expected to usher in recovery.

The company is a leader in the viscose staple fiber industry, with a high proportion of high-end differentiated products, as well as supporting raw materials such as caustic soda, which will help to fully benefit from the industry recovery.

The establishment of the executive reward fund will help enhance the company’s operating management efficiency.

Withdrawal of the reward fund takes the annual return on net assets to 6% and 10% as two critical points. The sum of the withdrawal ratios does not exceed 10% of the annual net profit. 60% of the reward fund is allocated to executives and 40% is allocated to employees.In order to bind the interests of executives, employees and the company to ensure the realization of the company’s future development goals.

Profit forecast and investment suggestions: The company is a domestic double-header of viscose staple fiber and soda ash, which continues to grow and develop in the circular economy system. It is expected that the company’s EPS in 2019-2021 will be 0.

31, 0.

39, 0.

55 yuan, the current sustainable corresponding PE is 16 respectively.

8, 13.

3, 9.

5 times, maintaining the “overweight” level.

Risk warning: the price of raw materials fluctuates sharply; the price of products drops sharply; product sales are lower than expected