Xinhecheng (002001) Semi-annual Report Review 2019: Falling prices of major products, etc. dragged down first-half results, heavy volume of new materials, etc., boosted second-quarter results

Investment Highlights Event: Xinhecheng released its 2019 semi-annual report, which is expected to achieve operating income38.

67 ppm, a decrease of 16 per year.

85%; net profit attributable to mother 11.

5.6 billion, down 43 each year.

87%; realized a dilute budget benefit of 0.

54 yuan, semi-annual operating net cash flow of 0.

35 yuan.

  The second quarter achieved operating income of 20.合肥夜网

31 ppm, an increase of 26 in ten years.

51%; net profit attributable to mother 6.

45 ppm, an increase of 14 years.

19%; EPS for the reduced quarter is 0.

30 yuan.

  We maintain our investment rating of “Prudent Overweight”.

Xinhecheng’s nutrition project and bio-fermentation project in the first half of 2019 steadily advanced as planned; the production of flavor and fragrance products was running at full capacity, and the cost of process optimization for some products decreased; the second phase of PPS accumulation was released and profit growth was tremendous.

As a result, products such as VA and VE are reduced, and the company’s sales performance has declined; however, the sales of multiple products have increased to varying degrees to maximize value.

The company’s multiple projects are advanced at the same 深圳桑拿网 time, which is expected to open up room for growth.

  Xinhecheng’s main nutrition products, flavors, fragrances, new materials and other products have become one of the world’s four major vitamin manufacturers.

In terms of nutritional products, VA suffered from increased profitability due to supply, and plans to build 2 VE projects or further reduce costs; the first phase of methionine project has been put into production, and the second phase 25 alternative investment project has begun construction.

In terms of flavors and fragrances, the company’s linalool, phytol and other products accounted for the highest global city share; the production capacity of maltol and other products under construction can increase the rich product line.

In terms of new materials, the company’s PPS and PPA are in a leading position in the country.

  In addition, the company plans to invest USD 3.6 billion in Heilongjiang to establish a biological fermentation industrial park, and its Shandong Industrial Park is also listed as a key construction project for the conversion of old and new kinetic energy in Shandong.

We adjusted the company’s EPS forecast for 2019 and 2020 to 1.

15.1.

44 yuan, and dating 2021 EPS is 1.

The forecast of 70 yuan maintains the investment rating of “prudent increase in holdings”.

  Risk reminder: the risk of constant fluctuations in the price of chemical products, the risk that new projects are put into operation less than expected, and the risk of the impact of the Sino-US trade war on global economic development is uncertain.