This is a titanium dioxide production scale, The first in Asia, the world's fourth listed enterprise, the company's current annual production capacity of titanium dioxide reached 600,000 tons.
In addition, the company can also produce about 100 million cubic meters of hydrogen per year in the production process, which can be used in new energy batteries, lithium battery materials and hydrogen fuel cells, so it also has a hydrogen fuel cell concept.
In 2020, the company's performance was only 2.289 billion yuan, down 12% from 2019.
But by 2021, all that had changed, and the company's net profit that year had reached 4.676 billion yuan. Not only is that a 104% increase over 2020, it's also a record high, and the company has taken a qualitative leap forward in the year.
After the stock of this company has fully adjusted by 64%, it has recently come out of a wave of upward trend.
(At the end of the article, the translator will tell you the name of the company and the code of the stock, please first objectively understand the basic situation of the company, and then reveal the final answer)
Main business and core competitiveness
The secretary of the board who answered the phone was a man, who spoke very professionally and had a fairly acceptable attitude.
During the conversation, the translator learned that the company is a large enterprise group dedicated to the deep integration of the titanium and zirconium industry chain, as well as the research and development and manufacturing of new materials.
The company's revenue from titanium dioxide accounted for 74%, iron products accounted for 10%, sponge titanium and titanium tetrachloride accounted for 6%, and zirconium products accounted for 5%.
In the company's financial report, the translator also learned that the company has set up a new energy company, specializing in the research and development, production and sales of new energy battery materials.
At present, the company has planned to build 200,000 tons of iron phosphate, 200,000 tons of lithium iron phosphate and 100,000 tons of artificial graphite anode projects, and carried out test drives at the end of 2021.
The translator also learned from the mouth of the secretary of the board of directors that the company has accumulated a total of 13.429 billion yuan since its listing. And in the past 5 years, dividends have been paid to shareholders, and the average proportion of dividends to net profits is more than 100%, which is very remarkable.
Especially in 2022, the company's dividends accounted for 224% of net profits.
This shows that the company not only distributed the net profit earned in the year to the shareholders, but also divided the retained earnings of previous years, which shows that the company is still relatively responsible for the shareholders.
After analyzing the basic situation of this company, let's take a look at the company's performance.
Net profit performance
The following and financial figures are derived from the consolidated balance sheet on page 5 and the consolidated income statement on page 8 of the company's first quarter 2022 financial report, and do not have any personal opinions.
In the first quarter of 2021, the company's net profit was 1.064 billion yuan. In the first quarter of 2022, the company's performance remained at 1.064 billion yuan, an increase of 0.03% year-on-year.
The current net profit of this company ranks 9th among the 169 listed companies in the A-share hydrogen energy concept sector. This ranking is very high, indicating that its ability to make money is very strong.
In addition to its large scale, the company's price-to-earnings ratio is also very low, currently only 12 times. The price-to-earnings ratio is the ratio of stock price to earnings per share and is the most effective measure of a listed company's valuation.
In the first quarter of 2022, the company's price-to-earnings ratio was only 12 times. This means that if the management distributes the net profit earned every year to the shareholders, you buy its 10,000 yuan of shares, and after 12 years, you can earn a dividend of 10,000 yuan.
This price-to-earnings ratio, among the 169 listed companies in the A-share hydrogen energy concept sector, ranks 19th from low to high. This rank is very high, indicating that the company is not currently overrated.
In summary, in the first quarter of 2022, the company was large and is not currently overvalued.
Reasons for performance growth
Let's analyze an important question, what caused the company's net profit to grow, and whether these factors can continue to work.
Through the use of DuPont Theory, the translator found that the main reason for the company's performance growth in the first quarter of 2022 was the amplification of financial leverage and the shortening of the sales collection time.
Financial leverage is usually measured using the equity multiplier, but translators feel that it is more possible to use the gearing ratio.
In the first quarter of 2021, of the company's 100 yuan of assets, only 48.47 yuan was borrowed, and the asset-liability ratio was 48.47%.
In the first quarter of 2022, of the company's assets of the same 100 yuan, 55.86 yuan was borrowed, and the asset-liability ratio was 55.86%, an increase of 15% year-on-year.
When a business is in a period of development and continues to be profitable, management often amplifies financial leverage to increase the debt ratio, so that it can borrow more money from the bank, thereby expanding production capacity and increasing net profits.
Therefore, a reasonable increase in the asset-liability ratio can enhance the company's earning power, but the excessive growth of the debt ratio will cause unnecessary burdens to the enterprise and be detrimental to its production and operation.
The time of sales collection is the account period of the company's sales of products, and it is also the time when the payment is returned to its account, which is measured by the indicator of the number of days of accounts receivable turnover.
In the first quarter of 2021, after the company sold its products, it took 33.49 days to receive payment. Now it only takes 32.62 days, and the time for sales collection has been shortened by 2.6%.
The shortening of the sales collection time indicates that the speed of returning the payment to the company's account has become faster, which improves the ability of the enterprise to make money and enhances the efficiency of the use of funds.
Through the above analysis, we learned that in 2022, due to the improvement of management's operational capabilities, this not only magnified financial leverage, but also strengthened the collection of accounts receivable and shortened the time for sales collection, which led to an increase in the company's performance in the first quarter.
Inadequacies
Because the translator does not write the article to recommend stocks, at the end of this article, the translator will analyze the problems and flaws of the company in detail to give you a risk warning.
Through the analysis of key financial data, the translator found that the company's biggest problem in the first quarter of this year was that the cash flow ability was weakened, and the cash in its account was not very abundant.
The indicator of net cash flow from operating activities is a measure of a company's cash receipts and expenditures, also known as the touchstone of net profit.
In the first quarter of 2021, the company's performance was 1.064 billion yuan. However, in the same period, the company's actual net cash earned due to operating activities was 537 million yuan, down 39% year-on-year.
The difference between net profit and net cash flow is accounts receivable, and it is also the payment for goods that have not yet been received. So usually, it is normal for net cash flow to be lower than net profit.
However, the company's net cash flow fell by 39% year-on-year, indicating that the company's cash flow is not very abundant compared to the same period last year.
Because the production and operation of enterprises need money, not the figure of net profit. Therefore, the weakening of cash flow ability is very unfavorable to the company's production and operation, which also needs our attention.
If the fundamentals of listed companies are divided into five levels from high to low, A, B, C, D, and E, the translator personally believes that the company can maintain the level of C level.
And this enterprise is Longbai Group Co., Ltd., stock code: 002601.
Please note: For companies with good fundamentals, stocks do not necessarily rise. But those stocks that can continue to rise sharply, the fundamentals of the company must be very good.
This article neither recommends the stock of Longbai Group, nor does it say how good Longbai Group Company is, but refines and translates the company's financial report.