Yonggao Shares (002641): Proposed Convertible Bonds Towards National Distribution
Investment points Investment points should include the company’s basic characteristics, main business points of view, forecasted investment logic and recommendation basis, performance expectations, investment ratings, valuation 南宁桑拿 analysis, risk tips and other core content.
The main points should be prioritized.
Points 3-5, the total number of words does not exceed 1000 words.
Risk reminder: Event: The company issued a convertible corporate bond preliminary plan announcement. It is expected that the company’s issuance of convertible bonds will not exceed RMB 700 million, with a term of 6 years from the date of issue and a face value of RMB 100.
The funds raised this time are mainly used for new annual production8.
New and new-type composite plastic pipeline projects and an annual output of 5 will gradually increase pipeline construction projects and supplement working capital.
Opinion: Actively expand production capacity, replace blank markets, and move towards a national layout.
The raised investment will be used to expand the production capacity for new construction of 8 new-type composite plastic pipeline projects per year and new construction of 5 new-generation high-performance pipeline construction projects. After the project is completed, the company will add 13 index plastics.Pipe production capacity will help the company’s production capacity (currently more than 50 inches) increase by about 20%.
Optimize product structure and improve core competitiveness.
“Newly built 5 large-scale pipeline construction projects with an annual output” are located in the Taizhou headquarters, and will introduce advanced intelligent mixing systems, energy-saving injection molding machines, high-speed extrusion lines, robots and other advanced equipment.
We believe that this move will further optimize the company’s product structure and improve the quality of development. At the same time, the company will consolidate its competitive advantage in East China and improve its comprehensive competitiveness.
The expansion of leading sites has accelerated, and the concentration of the industry has increased significantly.
At the front end, the plastic pipeline industry has developed steadily, with a five-year compound growth in output.
3%, the total output of plastic pipes nationwide in 18 years reached 1,567 inches.
With the promotion of policies such as consumption upgrade and national budget de-capacity, the industry has entered a reshuffle period, and the pace of expansion of leading companies in other regions has accelerated significantly.
Judging from the compound growth rate of output in the past five years, Yonggao shares reached 12.
0% (the company’s compound annual growth rate of 12 in the past 5 years.
9%, of which 10 in East China.
2%, non-East China region 17.
8%), China Lesso reached 11.
8%, Weixing new material reached 12.
0%, Xiongsu Technology reached 11.
9% (almost 3 years), the growth rate is significantly higher than the industry.
The profit volatility coefficient has stabilized in 2018 and has accelerated its pick-up in 2019.
The company’s attributable net profit has shown a trend of change in the past five years, mainly due to the company’s accelerated expansion since 2016, the increase in personnel, and profit channels, and with the rise in raw material prices, the company’s profitability has declined, but with the company’s sales scale and capacityThe increase in the layout was initially completed, and the company’s profitability level stabilized and rebounded. In 2018, the attributable net profit increased by 27% to 2.
4 ‰ (net profit after deduction is 47% per year).
Investment suggestion: The company is a major player in the domestic PVC pipe industry. The industry’s concentration in the sector is clearly increasing, and it will fully benefit. At the same time, the company actively cultivates channels, and expansion in different places begins to generate revenue. It is expected that future revenue and profit growth will significantly improve.
We expect the company’s net profit attributable to its parent to be 3 in 2019-2021.
500 million, 4.
300 million and 5.
4 trillion, corresponding to the closing price of PE on June 25 is 13.
6 times, maintaining the level of “prudent overweight”.
Risk warning: demand exceeds expectations, and raw material prices grow beyond expectations.