Investment points:
Company Announcement: The company releases the 2021 semi-annualPerformancePre-increaseannouncement, It is expected that the return to mother will be realized in the first half of 2021Net profit3.75 billion yuan to 3.85 billion yuan (YoY +314.82%~ +325.88%); of which Q2 is expected to achieve a net profit of 2.174-2.274 billion yuan (YoY +358.19%~ +379.27%, QoQ +37.94%~ +44.29%) , Performance exceeded expectations. During the reporting period, affected by rising energy prices and market supply and demand, domestic chemical products were booming, and prices of main products increased significantly year-on-year. The company grasped market trends, strengthened system optimization and production control, and achieved stable and efficient operation of production equipment. Operating performance increased significantly year-on-year.
The prosperity of products such as urea, acetic acid, and melamine exceeded expectations. Flexible production maximized the benefits, and Q2 performance increased significantly from the previous month. According to our price tracking, the average prices of the main products in Q2: synthetic ammonia, urea, acetic acid, DMF, adipic acid, octanol, and melamine increased by 27%, 13%, 44%, 11%, 12%, 14%, and 57% respectively. In particular, urea, acetic acid and melamine were driven by both cost and demand, and rose sharply in the second quarter; Q2’s main raw materials coal, pure benzene, and propylene rose 36%, 41% and 6% from the previous quarter. According to the production capacity of each product, it is comprehensively estimated that Q2 will increase revenue by about 1 billion yuan due to product price increases, and increase costs by about 360 million yuan due to rising raw materials. It is comprehensively estimated that the net profit attributable to the parent (after tax) will increase by about 530 million yuan from the previous month. While the product boom is on the rise, the company has given full play to the advantages of a multi-line industrial chain, further enhancing its operating efficiency.We are firmly optimistic about the continued prosperity of major products such as urea, butanol, DMF, and acetic acid. The basic products of coal chemical industry have insufficient capital expenditures in the past five years. In particular, products such as urea and DMF continue to undergo capacity elimination or capacity replacement.Oil priceAs the center moves upward and demand continues to recover, the relationship between supply and demand will continue to be tense.
The Jingzhou base is advancing steadily. In the second half of the year, the caprolactam and DMC projects in the Dezhou base will be put into production.
Space for development in the field of new materials. Recently, the environmental assessment and urea indicators of the Jingzhou base have been gradually implemented. As the development focus of the second base in the next five years, the second base is steadily moving forward and striving to start construction as soon as possible. We expect the Jingzhou base to be put into production in 2023, and the first phase of the project will be completed The average annual net profit is about 1.5 billion yuan. The Texas base will put into production capacity of 300,000 tons of caprolactam and 300,000 tons of dimethyl carbonate (ie DMC) in Q3, and will contribute an important increase from Q4 this year. The DMC project is the company’s key layout in the new energy industry chain. The company already has the process technology capability to produce battery-level DMC.During the “14th Five-Year Plan” period, the Dezhou base will focus on the deployment of new energy and new materials to realize the high-end transformation of traditional coal chemical industry. In the past two decades, the Dezhou base has accumulated solid technology accumulation and a complete basic chemical industry. Chain, we are optimisticHualu HengshengBuild a new material industry base based on syngas in Texas.
Investment rating and valuation: As the business climate of the main products continues to exceed expectations, we will raise it for 2021-2023profit prediction, It is estimated that the net profit attributable to the parent will be 76.9, 84.7, and 9.53 billion yuan (51.2, 54.9, and 5.8 billion yuan before adjustment), and the corresponding PE will be 9X, 8X, and 7X. Maintain “Buy” rating.
(Source: Shenyin Wanguo)
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