Yongxing Materials (002756) Company Comments: Accrual of provision for impairment affects short-term release of performance

Yongxing Materials (002756) Company Comments: Accrual of provision for impairment affects short-term release of performance

Performance summary: Yongxing Materials announced the 2019 performance forecast, reporting that a series of companies achieved net profit attributable to the parent company.

49-3.

87 ppm, a decrease of 0% -10% compared to the same period in 2018; accrual of impairment provisions affects profit performance: According to the company’s annual report announcement, we estimate that the net profit attributable to the parent company in Q4 2019 will be -0.

12 ppm-0.

26 trillion, compared with 0 in the third quarter.

The increase of 96 million US dollars was mainly affected by the provision for asset impairment losses. First, the provision for goodwill impairment caused by the previous acquisition of Yongcheng Lithium was 40-50 million; second, the receivables from Yongcheng LithiumThe amount of provision for impairment losses of 20-30 million yuan, each total affecting the company’s fourth-quarter profit of 60-80 million yuan (median 0.

700 million).

In addition, as the company contributed to the initial net profit attributable to mothers in terms of asset disposal and financial subsidies.

48-1.

68 ppm (median 1.

On the whole, in Q4, the net profit after deducting non-return to motherhood was still at a high level; the mainstay of the stainless steel business: the stainless steel business has become the company’s cash cow business.

As the performance of traditional steel companies has developed rapidly, the company’s stainless steel business is still expected to maintain a high level of profitability in the next two years, which is determined by its industry attributes and product characteristics.

The main layout of Yongxing Materials’ stainless steel rods and wires is in high-end areas such as petroleum refining. Its downstream docking with large state-owned enterprises such as the three major oil companies and power boiler plants has high certification thresholds for products, and once entered, the enterprise supply systemThe internal customer stickiness is much higher than that of ordinary steel, so the relatively high competitive landscape will support the company’s profitability to maintain a high level in the long term; lithium salt products are worth paying attention to: the existing company’s tandem grade lithium carbonate production line is at the end of commissioning, of which 1The design capacity of Line 5,000 tons has entered continuous production, while Line 2 is in an undistorted trial production.

In the future, we will gradually need to focus on the company’s order release status. After all, expansion of the scale and production line production are the prerequisites for the decline in the cost of lithium salt production; replacement needs to pay attention to the scale and quality of its downstream customers.In the system, the benefits of product recognition and order stability that it brings are inestimable.

We have compared domestic first-line lithium carbonate production enterprises, or Tianqi, Ganfeng and other companies have generally realized the entire industrial 四川耍耍网 chain layout from resources, mining, beneficiation to lithium salt deep processing, and Yongxing’s progress is not behind, andDomestic mines also have obvious advantages in controlling transportation costs, and have initially become the characteristics of a domestic high-quality lithium salt production enterprise. Investment advice: The stainless steel field has become the company’s cash cow business. A large number of certification doors in the petroleum refining and power sectors may lead to stable orders.With the further increase of its production and sales volume and product structure (there is still a 10% increase in output in 2020), the company’s stainless steel business profit is still expected to remain high.

And the scale is small, although the company’s lithium salt products have not yet been fully measured, the 重庆耍耍网 market’s attention has been relatively reduced, and the company’s overall industrial layout to reduce production costs, the future lithium battery product profitability is worth looking forward to.

We expect the company’s EPS for 2019-2021 to be 1.

01 yuan, 1.

27 yuan and 1.

52 yuan, continue to maintain the “overweight” rating; risk warning: stainless steel demand is significantly down; the deterioration of stainless steel rod and wire supply has spread from the low-end market to the high-end market; the company’s lithium ore resource product sales are not smooth; the lithium industry supply and demand continues to deteriorate.