Yunnan Germanium Industry (002428): 1H19 results are in line with forecast, dragged down by germanium price
1H19 results are in line with the forecast. Yunnan Germanium announced 1H19 results: operating income 2.
300 million US dollars, an annual increase of 15%; net profit attributable to mothers-8.24 million yuan, corresponding profit -0.
01 yuan, a decline of 208% each year, consistent with the performance forecast.
The decline in company performance was mainly due to a significant decline in germanium prices.
The company’s operating income in the second quarter of 19
300 million US dollars, + 28% / month + 23% year-on-year, net profit attributable to mother-9.14 million yuan, longer -2.
5x / Q11.
Comments: 1) The price of germanium has fallen sharply for the time being.
In 1H19, the average price of domestic germanium metal dropped by 24% to 7,872 yuan / kg, and the average price of 19Q2 dropped by 26%, which was 6% lower than the previous month.
2) Yield decline.
In 1H19, the output of molten germanium ingots in the company zone continued to fall by 8% to 21.
The output of 45 tons of infrared-grade germanium products, germanium monocrystalline wafers for solar cells, and germanium tetrachloride for optical fibers decreased by 50%, 70%, and 30%.
3) Sales of materials-grade products increased, while sales of precision processed products declined.
In 1H19, the sales volume of germanium material grade products continued to increase by 88%, but the sales of germanium products of infrared grade, photovoltaic grade and fiber grade continued to decline by 56%, 73% and 22%.
4) Gross 西安耍耍网 profit margin was dragged down by German prices.
The company’s gross profit margin (gross without tax and surcharges) for 1H19 was 13.
5%, an annual decrease of 11.
3ppt; 2Q19 gross profit margin 11.
8%, a decline of 10 per year.
9ppt, down 3 from the previous month.
5) 1H19 assets + credit impairment losses decreased by 3 year-on-year.
5x / 5.43 million to-3.88 million, mainly due to inventory price declines and bad debt losses.
6) 1H19 financial expenses increased by 92% / 4.41 million yuan to 9.12 million yuan annually, mainly due to the increase in working capital expenditure.
7) In 1H19, asset disposal + other income dropped by more than 28% / 2.03 million yuan to 5.25 million yuan.
Development Trend Germanium prices have limited downside, and 5G offers potential growth.
At present, the domestic germanium price is close to the cost line of some smelters, and the cost of germanium supports the replacement, and further downside is limited.
With the issuance of domestic 5G licenses, the amount of optical fiber used for 5G construction is expected to be significantly boosted, which will help germanium demand and prices.
Earnings Forecasts and Estimates Due to changes in assumptions such as prices and sales volume, we have lowered the ratio of profit forecasts to expectations in 2019 by 75% to 0.
005 yuan, maintaining the 2020 profit forecast of 0.
The current sustainable correspondence is 2019/20203.
7 times / 3.
7 times P / B ratio.
Maintain Neutral rating and 7.
Target price of 50 yuan, corresponding to 3.
3x 2019 P / B ratio and 3.3 times 2020’s P / B ratio, 11.
Risks German demand fell short of expectations, and German prices fell sharply.