报告名称：Valiant(002643)Three main operations to see rapid growth
报告类型：点评报告
报告日期：2016-02-04
研究机构：中金公司
股票名称：万润股份
股票代码：002643
页数：4
简介：Action
We upgrade Valiant from HOLD to BUY, and hike its TP by 25% to Rmb50 (51x 2016e P/E), mainly thanks to:1) earnings are expected to beat expectations in 1Q16, and grow rapidly in 2016; and, 2) its information materials,environmental protection, and healthcare businesses have visible outlooks, and look set to maintain rapid growth.
Reasoning
In 2015, revenue increased 53% YoY to Rmb1.631bn, and earnings increased 167% YoY to Rmb258mn or Rmb0.76/sh,in line with expectations. Management proposed distributing a cash dividend of Rmb3 for every 10 shares (tax incl.).
Information materials business to strengthen liquid crystal materials business and develop OLED displaymaterials business: Driven by the rapid growth in liquid crystalline monomer orders, revenue from the displaymaterials business +23% with GM +4ppt in 2015. We expect earnings from liquid crystal chemicals to chart a ~15%CAGR over the coming three years. OLED materials business is expected to become a new growth driver (2015 revenue:~Rmb60mn); with the global OLED industry to post a 16% CAGR over 2014~22. Valiant also plans to develop functionalnew materials, such as photoresist materials, to accelerate the development of the information materials industry.
Environmental protection materials business to see visible growth outlook thanks to favorable policies:zeolite materials business posted 255% revenue growth and a 9ppt rise in GM in 2015. The 850 tonne Phase I projecthas reached designed capacity, the 1,500 tonne Phase II project has entered the commissioning stage, and a 3,500tonne project is scheduled to start production in 2017. The downstream applications will likely expand from EU VI/VIIemission standards to waste gas treatment, and catalysis yields, such as MTO and MTP.
Development of healthcare business to accelerate: the company has obtained approvals for nine pharmaceuticalproducts, and has more in the pipeline. Management proposed acquiring MP to enter the life science and in vitrodiagnosis markets; domestic approvals and review of the acquisition are complete, the overseas approvals and revieware underway. Valiant plans to use independent R&D, outsourced R&D and M&A to expand its healthcare business.
Earnings forecast and valuation
The company expects its earnings to grow 260~310% YoY in 1Q16. Without factoring in the consolidation of financialstatements of MP, we raise our 2016/17 EPS forecasts by 11%/7% to Rmb0.99/1.20. The stock is currentlytrading at 38x/31x 2016/17e P/E. Raise TP to Rmb50 and upgrade to BUY.
Risks
Overseas M&A, project construction and downstream demand miss expectations.

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