Time New Materials (600458) Research Briefing: PI Films Smoothly Produce Goodwill Impairment Affects 2018 Profits
Key points of investment: The chemical imine PI film was successfully mass-produced, and new materials projects such as aramid and nylon were steadily advanced.
The company’s 500-ton capacity chemical imine PI film production line has been successfully mass-produced in 2018, with leading domestic technology and market supply and demand; the company’s second-phase PI film production line is planned for 2000 tons and is expected to be put into production in batches from 2020.
At present, the company’s PI film is mainly used for graphite heat sinks for smart phones and tablet computers. After the second-stage production capacity is put into production, it is expected to expand to more high-end areas.
In addition, the company’s nylon project has achieved mass production, and the aramid material production line is being commissioned, which is expected to become the company’s new profit growth point.
Railway investment is good for the rail transit market, and wind power recovery is expected to improve profitability.
In 2018, the national railway fixed assets investment completed 802.8 billion U.S. dollars, and plans to continue to invest more than 800 billion U.S. dollars in 2019; and the company’s shock and noise reduction products accounted for more than 70% of the domestic rail transit market share, fully benefiting from downstream railway investment.
In addition, the wind power industry is picking up in 2018, and the company’s gross profit margin has improved; it is expected that with the warming of the Three North Market in 2019, the test of the wind farm price list, the accelerated development of offshore wind power, and the rush installation of stocks approved in low wind speed areas, 2019-2020年 年中国风电市场有望进一步回暖，利好公司风电业务。
Domestic plants in the automotive business are gradually put into production, which is expected to reduce costs and increase efficiency in the long run.
In 2014, the company completed the overall acquisition of the BOGE rubber and plastic business of the German ZF Group, and gradually became the third largest AVS product supplier in the world.
After the acquisition, the company transferred part of its production capacity to a country with cost advantages. At present, the Qingpu plant is full, the Zhuzhou plant is gradually put into operation, and the production capacity of the Wuxi plant is about to be completed.
In the later period, the transfer of production capacity was completed, the human burden in Europe was reduced, and the profitability of the automotive business was promoted.
The return of some euro debts locks in exchange gains and reduces earnings volatility.
The company acquired BOGE in 2014 and borrowed 2.
0.3 billion euros in debt, performance has long been affected by fluctuations in the euro exchange rate.
From 2015 to 2017, the company’s exchange gains and losses were 89.09 million yuan, 19.28 million yuan and -1, respectively.
US $ 5.3 billion (positive gains and negative losses), respectively, reached 34 net profit attributable to the mother for the period.
0% and 228.
In the second quarter of 2018, the company returned 80 million euros of foreign debt and locked in exchange gains of RMB 24.98 million.
As the company’s euro debt decreases, the impact of exchange rate fluctuations on the company will decrease.
Impairment of goodwill 5.
300 million affects 2018 profit.
On March 18, 2019, the company issued an announcement that it expects to achieve a net profit attributable to shareholders of listed companies of approximately RMB -427.42 million in 2018 (reporting and auditing), leading to the company’s gradual progress in 2018. The company ‘s wholly-owned subsidiary, Germany BOGEThe provision for goodwill impairment amounted to 67.85 million euros, which affected the company’s consolidated statement of net profit by RMB 529.87 million.
Exceeding the impact of the German BOGE goodwill impairment, the company is expected to realize a net profit attributable to shareholders of listed companies of approximately RMB 10.25 million in 2018, an increase of 33.23 million yuan or 48% over the same period last year.
Earnings forecast and investment rating: Covered for the first time, giving a “buy” rating.
The company takes composite materials as the core, and develops downstream areas of rail transportation, automobile vibration reduction, wind power generation, and new materials.
The company’s current PI membrane technology is leading domestically, and downstream markets such as rail transit and wind power are 佛山桑拿网 gradually recovering. Although goodwill impairment affects short-term profits, we are optimistic about the company’s long-term development. It is expected that the EPS for 2018-2020 will be -0.
19 and 0.
49 yuan / share.
Covered for the first time and given a “Buy” rating.
Risk warning: PI film mass production is lower than expected; downstream market demand recovery is lower than expected; new project launch progress is lower than expected; product downstream development is lower than expected; goodwill impairment risk; exchange rate changes.