Analysis of companies related to the dye industry
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The global dyestuff sales volume of 130,000 tons- in 1H17 was up 23%- year-on-year, and the domestic market pattern in the first half of the year was one of rising volume and price, and stable abroad.
Dyes, intermediates these original business development has been consistently solid, but the half-yearly report reflects the situation, feel Longsheng as the absolute leader of this industry, in a conscious guide to the market, even at the expense of some of their own sales to ensure the overall profitability of the market, the intensity of market competition relative to previous years moderated a lot, may not be the reason for Longsheng. Longsheng half-year dye division (excluding Desta) assets 23.9 billion -, liabilities 15.5 billion -, equity 8.4 billion -, revenue 2.4 billion + less than leap earth about 500 million +, gross margin 37.5%, 7.5 percentage points higher than leap earth, to ensure the embedded added value, although these added value by the interest rate range of 3.5 – 4.2% 5.5 billion bonds are swallowed up in the form of interest, but the equity capital generated from the past profits of the dye division is invested in the form of asset allocation to Desta, investment, intermediates, real estate and other businesses by Ruan Weixiang, who is a master of capital allocation.
Desda business is mainly overseas, with half-year revenue scale of 3.4 billion +, gross margin of 33% +, total assets of 6 billion -, accounting for 54% + of Longsheng’s foreign assets, and liabilities of 2.9 billion +. In terms of efficiency as reflected in the segment data, Texdata is much more efficient than Longsheng’s domestic dye business, which can involve merger offset issues, so the real situation is unknown. From a broad perspective, Desda’s current operations reflect Longsheng’s strategic vision and integration capabilities. The Destek business is a plus.
Intermediates business with half-year revenue scale of 1.35 billion-, gross margin of 38%-, occupied assets of 7.5 billion +, liabilities of 4.3 billion +, the expansion of intermediates is the path of transformation of Longsheng from chemical to chemical, related to this is the half-year R&D expenditure of 300 million -, up 16% +, this alone can conclude the unshakable advantage of Longsheng in dyes and related business.
Real estate business, assets 19.3 billion-, liabilities 17.7 billion-+, equity 1.6 billion-. I really don’t know enough about this business to say anything.
In general, one can look at Longsheng from the following perspectives: Longsheng has tried several times to create a super oligarchy in the dye industry, but in addition to Desta, domestic Yabang decoupling, leapfrog because of various interest factors also unsuccessful, domestic dye integration has not succeeded; intermediates expansion shows ambition, short-term do not see the direct benefits; in this pattern, the excellent leader Ruan Weixiang, fully exploit their own advantages, in the dye should not be light to start Under the situation of war end, from two paths of investment and real estate, trying to enhance the return of assets, but for investors to increase the difficulty of judgment too much. This time the price of dyestuff rose, the earnings contributed to Longsheng may not be much.
The reasons why it is difficult to start are, first, the complexity of the business and the wide range of subsidiaries (111 subsidiaries, easy to get big company disease); second, the leverage on the asset structure is really a bit scary; third, buying Long Sheng is equivalent to buying the leader Ruan Weixiang’s ability to allocate assets, which can not be observed from the information, information asymmetry, the results of the family business battle can not be predicted.
Semi-annual report records: revenue 7.5 billion +, net profit 1 billion +, net flow by present – 1.1 billion +, total capital 42.6 billion -, attributable equity 16 billion -, ROE 6.3% -, fixed assets 5 billion -. September 12 market capitalization 34.8 billion.
II. Leapfrog
Semi-annual revenue 2.93 billion +, gross margin 30% +, net profit attributable to mother 400 million + (260 million + in the same period), net flow through the present 220 million – (520 million – in the same period). Although revenue growth and half-year profit increase, the true extent of profit is limited, and not a problem of Leapfrog, the industry in general. Looking at the cash flow statement, we can see that operating receivables increased by 750 million – and payables increased by 360 million -, while the loans that Leapfrog paid off in the first quarter were added in the second quarter.
Inventory structure and the beginning of the year than nothing changes, raw materials, in production, inventory are little change, but rather than the first quarter increase, the impact of seasonal factors is one hand, on the other hand is can be seen that the time span of the year as a unit, the price increase is only a concept, the psychological impact on investors, the actual sales will not have much impact, and thus will not be too much impact on revenue profits, producing relatively large earnings increase, not to mention cash flow. The company is still the same company, the psychology may not be the same as before.
The volume increased by 23%-, revenue increased by 25%+ in the first half of the year, Leap earth increased by 40% in revenue and unknown volume in the first half of the year; Longsheng’s incremental gross margin was 46%- (last year’s stock gross margin was 35%+), Leap earth 40.5%- (28.6%+). Leap earth’s scale effect and cost control are worse than Longsheng and better than other industry players.
In the first half of the year, Leap earth business extended upstream and merged with intermediates company Jiangsu Yuanzheng, the M&A price is very low in secondary market terms, 252 million purchase price, 5.7 PE + 1.5 PB, 2016 revenue of 350 million, net profit of 44 million -, which previously mainly provided intermediates for Leap earth. From this transaction, we can see that the survival of companies in the industry is becoming increasingly difficult, and can sell never delay; industrial capital valuation of companies in the industry, to be much lower than the current price of the secondary market. Echoing this situation, the executives of Leap Earth and Yabang, coincidentally, plan to reduce their holdings, the number is not small, and a little attitude can be seen from the behavior.
All these circumstances determine that the current position, which is speculative, is quickly abandoned when the basis for holding does not exist. This feedback basis, not fundamentals, not good or bad, just some indicators of the measure of sentiment.
Half-yearly report record: revenue 2.93 billion +, cost 2.05 billion -, gross margin 30% +, net profit attributable to 400 million +, by the present net flow 220 million -, ROE 6.3% -, fixed assets 4.6 billion -, total capital 8.8 billion -, attributable to the equity 6.5 billion -. September 12 market value 14.8 billion.
Third, Yabang
The disclosed operating data show that the price change in the first half of the year was not significant, but the price of anthraquinone dyestuff raw materials jumped 20%, dragging down the operating effect. The gross margin for the period was 47% +, down 2 percentage points year-on-year. The company explained in its semi-annual report that the prices of major products diverged in the first half of the year, with overall prices rising slightly year-on-year and sales declining.
Almost all shares of major shareholders are pledged, twice announced that executives are ready to reduce their holdings, the decline in management expenses is very suspicious, the inventory structure does not match the analysis of companies in the industry and the business situation, the tight capital chain, etc.. All these are very suspicious, the major shareholder’s problems back then may not be completely solved, and expect people to rely on moral self-discipline, not to do the supervisory thing, it is really very test of human nature; I do not believe that the unrestricted human nature, withstand the temptation.
So, once there is part of the position, a loss of a little all thrown out.
Semi-annual report records: revenue 1.23 billion +, net profit 320 million -, by the present net flow 190 million +, total capital 4.2 billion +, equity 3.5 billion -, ROE 8.8% -, fixed assets 1.2 billion -. September 12 market value of 11 billion.
Fourth, Jihua
Just IPO, did not look carefully, recorded the data.
Revenue: 1.24 billion, up 9.6%, net profit: 200 million, up 12%, net current: 210 million, total capital: 4.6 billion, equity: 3.8 billion, ROE: 9.5%, fixed assets: 1.05 billion, market cap: 12.4 billion on Sep. 12.
V. Anuoqi
Revenue 720 million +, net profit 0.62 billion -, net current flow 0.34 billion -, ROE 5.85%, total capital 1.6 billion +, net capital 1.08 billion +, fixed assets 0.35 billion -.
Non-public offering in the first half of the year passed the meeting, amounting to no more than 440 million, no more than 5 specific investors, for the construction of 30,000 tons of dye intermediates.
Market value of 5.05 billion on September 12.
Sixth, Haixiang Pharmaceutical
First half of the dye business revenue of 550 million +, cost 260 million -, comprehensive gross margin of 53.4% +, net profit of 155 million, down 38% +.
Among them, dyestuffs were 340 million – (down 34% +) and intermediates were 210 million + (up 75% +).
The company’s data can only be used as a reference, the letter approval is incomplete, it is difficult to compare with peer companies.
Seven, airman shares
It is still the same excellent company, just buy now to take advantage of the obvious cheap. From its cost, there is an improvement over last year, but it is not very obvious, and not to the cost of the year 14 when the dye price was the highest.
Revenue 1.62 billion -, net profit attributable to 240 million +, net flow by present 350 million -, attributable equity 3.22 billion +, total capital 4.36 billion, ROE 7.5%. market capitalization 8.2 billion on September 12.
