Taihe New Materials (002254) 2018 Annual Report Comments: Aramid Boom Drives Significant Performance Growth Aramid and Spandex New Capacity Drives Long-Term Growth

Investment Highlights Event: Taihe New Materials released its 2018 annual report, which reported that it actually achieved operating income21.

72 ppm, a 39-year increase of 39.

72%; realized operating profit 1.

58 ppm, an increase of 28 in ten years.

27%; net profit attributable to shareholders of listed companies1.

56 ppm, an increase of 56 in ten years.

25%, press the latest 6.

Based on the total share capital of 1.1 billion shares, the company realized a diluted income.

26 yuan, regardless of operating net cash flow of 0.

16 yuan.

Among them, the fourth quarter achieved operating income6.

USD 10.2 billion, an annual increase of 102.

64%; realized operating profit of 0.

01 billion, down 96 every year.

39%; Net profit attributable to shareholders of listed companies was 0.

1.5 billion, down 50 every year.

87%; Converted single quarter EPS is 0.

02 yuan.

At the same time, the company released the first quarter report of 2019, which reported operating income6.

56 ppm, a 49-year increase of 49.

86%; realized operating profit of 0.

44 ppm, an increase of 4 per year.

37%; Net profit attributable to shareholders of listed companies is 0.

4.1 billion, an increase of 14 in ten years.

75%.

Maintain the level of “prudent overweight”.

Taihe New Material’s 2018 performance achieved growth and growth, mainly due to the improved supply and demand pattern of meta-aramid and para-aramid, and significantly improved profitability.

Taihe New Materials is a leading manufacturer of aramid and spandex in China.

The company’s layout of aramid products in military, civilian and other fields has been continuously promoted to achieve steady growth in sales and profits.

The spandex market has been in the doldrums for many years. Due to the deterioration of profitability and environmental protection regulations, some small and medium-sized production facilities have gradually withdrawn. The concentration of the industry has gradually increased, and subsequent profitability has improved.

In addition, the company’s planned 天津夜网 aramid project is steadily advancing, the technical level and capacity scale have been significantly improved, and the global competitiveness has been significantly improved; the Ningxia spandex base transformation has continued to advance, and production and sales have gradually entered normal, and future energy and resource advantages are expected to become prominent.

We adjusted the company’s EPS from 2019 to 2020 to 0.

33, 0.

46 yuan, and dating 2021 EPS is 0.

Earnings forecast of 66 yuan, maintaining the rating of “prudent overweight”.

Risk reminder: The progress of the new project is less than expected, and the competition in the spandex and aramid industries is intensifying.