Zhejiang Longsheng (600352): Demand Side Is Expected To Improve Dye Boom Is Expected To Regain Momentum.

Huatai Securities issued Zhejiang Longsheng research report pointed out that since 2019Q2, dyes and intermediates prices rose rapidly, and the demand side is expected to slump, the downstream replenishment efforts are cautious, taking into account the subsequent peak season demand, absolute inventory is also low. With the expected easing of trade friction and the low inventory of the industrial chain, the replenishment of stocks is expected to start. The dye boom is expected to regain its momentum. If the capacity of dyestuff enterprises in Northern Jiangsu continues to be limited, it will benefit Zhejiang Longsheng. With the company's capacity of 140 thousand tons of disperse dyes, assuming that the cost remains unchanged and the tax price rises by 10 thousand yuan / ton, the company's EPS rises by 0.29 yuan. Research report predicts that the company's EPS in the 2019-2021 year is 1.99/2.21/2.36 yuan, based on comparable company valuation level (average 11 times PE in 2019), giving the company 10-12 times PE in 2019, corresponding to the target price 19.90-23.88 yuan (original value 25.87-29.85 yuan), reiterates the "buy" rating.