Kuncai Technology (603826): High growth will continue and change

Kuncai Technology (603826): High growth will continue and change

Key points of the report describe the company’s revenue in Q1 20191.

4 ‰, an increase of 14 in ten years.

8%, attributable net profit of 34.92 million yuan, a decline of more than 4.

6%, deducting non-net profit of 34.65 million yuan, an annual increase of 21.

1%.

The event commented that the trade friction affected the pace of heavy volume, and the logic of high-end product heavy volume shifted.

In our judgment, the increase in revenue in the first quarter was mainly due to the increase in average price, and the weak growth in sales was mainly due to trade frictions affecting the purchasing rhythm of some customers; however, high-end products such as cosmetics and automobiles have seen a rapid increase in average prices.

The gross profit margin in the first quarter was approximately 46.

7%, an increase of 2 per year.

Four averages, the average price growth fully offset the adverse impact of the increase in raw material costs.

The rate is about 19.

3%, an increase of 3 per year.

6 units, of which sales rate increased by 2.

1 unit, the financial rate is increased by 1.

6 singles (mainly due to increased exchange losses).

In addition, other gains decreased by more than 9.08 million yuan, mainly due to the reduction in government subsidies.

In the end, non-net profit was increased by 21% each year, achieving stable growth.

What has changed is the 北京夜网 downstream procurement rhythm, and sales are expected to improve.

The company is located in the second batch of taxation list. Since September 24, the tariff was increased to 10%. Since the second half of last year, it has been continuously affected by trade frictions.

Because low-end products are price-sensitive, the company faces a decline in profits due to tariffs, or a decrease in orders due to tariff transfers downstream.

The company chooses the former among the stable profit level (or price system) and the low-end market, so it is directly affected in the short term. However, due to the lack of other global high-quality benefits in the low-end market, the company can gradually restore the stability through downstream procurement.

What remains unchanged is core competitiveness, and high growth is expected to continue.

The high-end products in Q1 2019 continued to increase, leading to a significant increase in average price, which increased the gross profit margin2.

4 pct, offsetting the negative impact of raw material cost growth.

However, due to the appreciation of the renminbi and rising raw material prices, the gross profit margin in Q1 2019 was basically flat.

With Fu Shi’s annual output of 20 entering the dichlorotitanium chloride project will be put into production in April, it is expected that the replacement of manufacturing costs will usher in a significant decline in the second quarter.

Performance growth is expected to accelerate quarter by quarter.

High funding is the cornerstone of future high growth.

The company’s cash-to-cash ratio is close to 1, but the net cash flow from operating activities has decreased, mainly due to the payment of loans and taxes, and the stocking of Fushi.

In addition, sales and R & D expenses have increased, which together shows that the company is currently in the product and market development period.

Continue to be optimistic about the company’s global competitiveness and alternative growth logic. It is expected that the company’s EPS for 2019-2021 will be 0.

61, 0.

84, 1.

34 yuan, corresponding to PE is 27, 19, 12 times, buy level 1.

1 Note: The EPS in the estimation model is readjusted according to the latest equity risk tips: 1.

The global economic growth has dropped sharply; 2.

The production capacity of the industry exceeded expectations.