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Shenzhen Xinxing (603978): Performance meets expectations Expects continued promotion of potassium tetrafluoroaluminate

Event: In the first half of 2019, there were 521.84 million yuan in camps, an increase of 7.

1%; net profit was 57.85 million yuan, an increase of 7.

3%; net profit excluding non-recurring gains and losses was 52.29 million yuan, an increase of 28.

0%.

In the second quarter, the net profit of non-returning mothers was 39.5 million yuan, an increase of 120%. Since the second quarter, potassium tetrafluoroaluminate has gradually increased in volume and has become a major source of profit growth.天津夜网

Potassium tetrafluoroaluminate is well promoted.

In the first half of 2019, the company’s aluminum grain refiner sales volume2.

2 Initially, flat for one year; sales of potassium fluoroaluminate products were 0.

9 for the first time, growing by 149 per year.

6%; fluorite powder sales 1.

0 Initially, 51 per year.

7%.

The company has accelerated the market promotion of aluminum electrolytic energy-saving material potassium tetrafluoroaluminate. At present, it has realized its industrial application in domestic aluminum electrolytic enterprises, and the product application effect is good.

In the first half of the year, non-recurring gains and losses were only 6.57 million yuan (15.45 million yuan in the first half of 2018). The increase in profits was mainly due to the increase in sales of potassium 无锡夜网 tetrafluoroaluminate.

Potassium tetrafluoroaluminate boosted overall gross profit margin2.

8PCT.

In the first half of 2019, the company’s product gross profit margin was 22.

7%, the same increase of 2.

8PCT.
The increase in gross profit margin was mainly due to the gross profit margin of potassium tetrafluoroaluminate exceeding that of aluminum particle size refiners.

Expense rates remain stable.

In the first half of 2019, the company’s sales rate / financial rate / management fee rate were 2 respectively.

3% / 0.

6% / 6.

8%, the same increase -0.

4PCT / 0.

4PCT / 0.

2PCT.

The slight increase in the management fee rate was mainly due to the increase in management department budgets, depreciation, etc .; the increase in the sales expense rate was mainly due to the increase in index expenditure and the decrease in index revenue during the current period.

The narrowing of cash flow may be related to the opening of potassium tetrafluoroaluminate.

In the first half of 2019, the company’s cash flow from operating activities was 71.76 million yuan, an increase of -26.

6%, accounts receivable 288.7 million yuan, an increase of 16.
.

4%, the cash flow narrowed slightly, and the increase in accounts receivable may be related to the initial opening of the new product potassium tetrafluoroaluminate.

The construction of other production lines was accelerated.

① In the first half of 2019, Luoyang Xinxing 3’s initial / year aluminum particle refiner project was put into production.

② The Shenzhen plant reserves 3 years / year of aluminum particle refiner production capacity and gradually converts to other high-end alloys (aluminum-titanium-carbon, aluminum-boron, aluminum and thus aluminum-vanadium, aluminum ≤ alloys).

③ The production line of Henan Luoyang Granular Refining Agent Project for Aluminum Alloy Processing has been accelerated.
④ The electronic-grade hydrofluoric acid project is in the pilot stage.
⑤Petroleum catalyst carrier raw material SB powder has been completed pilot test, and production line is under construction.

Profit forecast: The company is the leader of aluminum grain refiner. In 2019, the output of 3 aluminum particulate refiners will be put into production. The main business is expected to continue to grow.

At the same time, the company implements a high-barrier potassium tetrafluoroaluminate preparation process, which is expected to quickly open the market in the field of electrolytic aluminum power saving. We expect the company’s net profit attributable to its mother to be 2 in 2019-2021.

1/3.

2/4.

4 trillion, corresponding to EPS 1.

29/1.

97/2.

75 yuan / share, corresponding to PE of 23.

1X / 15.

1X / 10.

8x, maintain “Buy” rating.

Risk reminder: Aluminum grain refiner, grain refiner sales price risk, potassium tetrafluoroaluminate sales are less than expected, other manufacturers master the synthesis technology of potassium tetrafluoroaluminate.