Xinjiang Zhonghe (600888): Corrosion foil supply slows company’s performance
Event description: The company’s 2019 semi-annual report shows that the first half of the year achieved revenue 22.
500 million yuan, a reduction of about 2% a year; net profit attributable to mother 0.
910,000 yuan, a year-on-year decrease of 11%, to reach zero income.
Incident Comment: Affected by the fire accident in the corroded foil workshop, the revenue of the electrode foil segment decreased.
Reporting intermediates, the company’s high-purity aluminum achieved sales revenue3.
3.1 billion yuan, electronic aluminum foil sales revenue3.
1.1 billion US dollars, stable compared 天津夜网 with the same period last year; electrode foil due to insufficient supply of corroded foil, sales revenue4.
1.6 billion, a certain margin; alloy products, aluminum products total sales revenue7.
8.3 billion US dollars, basically the same as the same period last year; from the perspective of domestic and foreign market distribution, the company’s export revenue was 2.
40 ppm, an increase of 10 years.
The production capacity advantage is obvious, and the aluminum foil business is growing steadily.
The company’s non-public offering of shares raised about 7.
500 million yuan will be used for: (1) an annual output of 15 million square meters of high-performance high-pressure high-pressure foil forming project; (2) an annual output of 15 million square meters of high-performance high-pressure corrosion foil project; (3) repayment of bank loans.
By the end of June, part of the project’s production lines had entered the commissioning production stage.
The total number of targets for this offering is four: TBEA has subscribed for approximately 3.
6.8 billion yuan, Zhuhai Gree Electric Co., Ltd. subscribed for about 200 million yuan, Jiangsu Quanquan Agricultural Bank state-owned enterprise mixed transformation transformation and upgrade fund subscription for about 1.
48 ppm, Shenzhen Boding Huaxiang Investment Partnership subscribed for about 0.
Currently, TBEA holds a 30% stake.
85%, still the company’s largest shareholder.
Gree Electric’s shareholding ratio is 4.
44%, the company’s third largest shareholder.
Gree Electric has strategically invested in shares and deepened cooperation with Xinjiang Zhonghe.
Xinjiang Zhonghe is an important supplier of medium- and high-voltage foil-forming materials for Gree Electric. This strategic equity investment in Xinjiang Zhonghe has improved the company’s supply chain system and provided stable raw material supply guarantee for the company.
In addition, in-depth cooperation with Xinjiang Zhonghe can accelerate the company’s emerging industry product promotion and form a close strategic cooperative relationship.
Profit forecast and investment recommendations: Considering the sales volume and cost impact of electrode foils during the year, after adjustment, it is estimated that the company’s net profit attributable to mothers in 2019-2021 will be 1.
96 ppm; EPS is 0.
29 yuan, with a daily corresponding P / E of 22 on August 14, 2019.
2X, 北京夜网 16.
3 times, give overweight rating.
Risk warning: Alumina, electrolytic aluminum prices fluctuate, aluminum foil demand is less than expected