\u3000\u3000 Hengli Petrochemical Co.Ltd(600346) (600346)
Event 1: the company announced that its subsidiary Hengli Petrochemical Co.Ltd(600346) (Dalian) new materials technology Co., Ltd. plans to invest in the construction of 1.6 million T / a high-performance resin and new materials project, which includes 14 sets of chemical (combined) units such as 260000 T / a polycarbonate unit, 300000 t / a ABS unit, 450000 T / a ethylene oxide unit, 400000 t CO2 recovery and 200000 t / a ethanolamine, The main products include: bisphenol A23 180000 T / A, 131200 T / a isopropanol, 130000 T / a ethylene oxide, 260000 T / a polycarbonate, 200000 t / a electronic grade DMC (including EC, EMC and DEC), abs300 T / A and gpps7 50000 T / A, hips7 50000 T / A, 160500 T / a ethanolamine, pdo7 20000 tons / year and 60000 tons / year of PTMEG. The total investment of the project is 19.988 billion yuan and the construction period is 18 months.
Event 2: the company announced that its subsidiary Hengli Petrochemical Co.Ltd(600346) (Dalian) new material technology Co., Ltd. plans to invest in the construction of a high-performance polyester project with an annual output of 2.6 million tons. The project includes the proposed construction of three 600000 T / a polyester production lines, two 300000 t / a polyester production lines and two 100000 t / a polyester production lines; The main products include: 100000 t / a film grade masterbatch polyester chip, 100000 t / a photovoltaic material polyester chip, 900000 T / a film grade polyester chip, 300000 t / a ultra bright polyester chip, 1.2 million T / a industrial silk polyester chip. The total investment of the project is 4 billion yuan and the construction period is 18 months.
The total investment of the two major projects of the company is about 24 billion yuan. After the project reaches production and efficiency, it is expected to achieve an average annual after tax net profit of 7.7 billion yuan, and the total after tax investment return rate of the two projects is as high as 32%.
Comments:
1. It is proposed to invest 24 billion yuan to expand the downstream new material industry chain, and the company has broad growth space in the future
It is expected to contribute to the performance increment by laying out the field of high value-added new materials in the downstream: the main products of the company’s 1.6 million T / a high-performance resin and new materials project are electronic grade DMC (including EC, EMC and DEC), ABS, PC, GPPS, hips and other new materials, which have higher added value compared with traditional chemicals. After the project reaches production and efficiency, it is expected to realize an average annual net profit after tax of 6.86 billion yuan, After tax return on investment is about 34%; The main products of the company’s high-performance polyester project with an annual output of 2.6 million tons are film grade chips, film grade masterbatch, photovoltaic polyester materials, industrial silk grade chips and other chips, membranes, masterbatch and base material products for the needs of the downstream high-end differentiated market. After the project is completed and put into operation, it will effectively expand the production capacity and scale of the company’s Polyester new material business sector and deepen industrial barriers, Strengthen the “three highs” characteristics of the company’s polyester products with high specifications, high premium and high barriers, and improve the added value of the company’s products and the market share of the company’s polyester products. It is expected that the project can achieve an average annual after tax net profit of 840 million yuan and an after tax return on investment of about 21%. The company cut into the new track of functional film, laid out the high-end polyester production capacity of industrial silk and photovoltaic materials, and further expanded the industrial chain to the field of high value-added, which is expected to contribute to rich performance increment.
The preliminary work of the two major projects has made positive progress, and the construction achievements are expected to accelerate the transformation: on January 20, 2022, Dalian ecological environment bureau announced the proposed approval of two major new material projects of Hengli Petrochemical Co.Ltd(600346) (Dalian) new material technology Co., Ltd. with an annual output of 2.6 million tons of high-performance polyester project and 1.6 million tons / year high-performance resin and new material project. The construction of Hengli Petrochemical Co.Ltd(600346) production capacity projects has always been efficient. For example, the refining and chemical integration project with an annual output of 20 million tons in Dalian has a large scale. It was started in April 2017 and put into operation in May 2019. It took only 25 months from the ground breaking to the full completion, only 3 months for the whole process to start and put into operation, and only half a month for the full production; The ethylene project with an annual output of 1.5 million tons was started in October 2018 and completed and put into operation in July 2020, taking less than two years; The annual output of 33000 tons of PBS project started in early 2020 and was completed and put into operation in December 2020. It took less than one year. The efficient project construction won the first opportunity for the company to layout the industry, reflecting the “constant speed”. Lean management and strong business execution are the strong guarantee for the sustainable development of the company.
The downstream demand for new materials is strong, and the product market prospect is good: with the rapid development of Shanxi Guoxin Energy Corporation Limited(600617) , new manufacturing and new consumption, the demand gap of “neck” and shortage of new materials is becoming increasingly prominent. The development of Shanxi Guoxin Energy Corporation Limited(600617) automobile industry is in the east wind. The sales volume of new energy vehicles reached 3.52 million in 2021, with a year-on-year increase of 158%. As an electrolyte solution, electronic grade DMC will be driven by the development of downstream new energy vehicles, and the demand will continue to increase. As a thermoplastic engineering plastic with good transparency, polycarbonate (PC) also benefits from the rapid development of downstream electronic and electrical appliances, construction and automobile fields. In contrast to the strong demand, electronic grade DMC has high technical barriers, difficult production and purification, and large supply gap. The company’s 1.6 million T / a high-performance resin and new materials project is expected to produce 260000 T / a polycarbonate and 200000 t / a electronic grade DMC (including EC, EMC and DEC), which will help China break through the “bottleneck” and “capacity bottleneck” in the field of new energy, new manufacturing and new consumer materials.
MLCC (chip multilayer ceramic capacitor) is one of the chip components with the largest consumption and the fastest development in the world. It is widely used in various electronic products. Downstream applications include smart phones, automotive electronics, wearable devices and 5g communication base stations. In recent years, China has certain medium and high-end MLCC preparation capacity, but the supporting BOPET release film still needs to be imported. China’s self-sufficiency rate is very low, and there is a huge space for domestic substitution. The company’s high-performance polyester project with an annual output of 2.6 million tons is oriented to the consumption demand of downstream differentiated materials. The production capacity layout of high-end polyester such as industrial silk grade and photovoltaic material grade will provide strong support for the rapid development of downstream MLCC release base film, optical film, photovoltaic film and other high-end films. In the future, the company’s Polyester new material industry will continue to develop in the direction of high-end differentiation, The core competitiveness will continue to strengthen.
The implementation of China’s “double carbon” strategy, the transformation and upgrading of manufacturing industry and the change of consumption structure will promote the rapid development of China’s renewable energy, new energy vehicles, 5g technology, consumer electronics, integrated circuits and other industries, simultaneously drive the increase of the demand for relevant new chemical materials, and have a broad market space in the future. The company has strong downstream demand in the field of new materials and has a good market prospect.
Relying on refining and chemical integration, new material supporting projects can effectively reduce the comprehensive operation cost: the construction sites of the two projects are Hengli (Dalian Changxing Island) Industrial Park. In response to the national call and the important measures taken by the central government to revitalize the northeast, Hengli Group invested 180 billion yuan in Dalian Changxing Island, one of the seven national petrochemical industry bases, to build Hengli (Dalian Changxing Island) Industrial Park. At present, the park mainly constructs 12 million T / a PTA project, 20 million T / a refining and chemical integration project and 1.5 million T / a ethylene project, which is rich in engineering resources. The two major projects announced by the company this time will share the existing public engineering resources in the park, expand and build new production and supporting facilities on the basis of them, realize the integration, resource sharing and coordinated development of new projects and existing projects, realize the unified allocation of devices and materials, and focus on water supply, power supply, gas supply and thermal power, so as to reduce land use, save resources, reduce energy consumption Optimize costs and improve efficiency, and give full play to the advantages of industrial synergy.
Upgrading to the “platform + new material” mode has significant scale advantages: after years of development, Hengli Petrochemical Co.Ltd(600346) has effectively built a strong “big chemical” platform, and completed four capacity clusters: 20 million T / a refining and chemical integration project, 4.5 million T / a aromatics, 1.5 million T / a global largest ethylene monomer project and five sets of PTA units with a total of 11.6 million T / A. The company accelerates the layout of high-end new materials in the downstream, which will make full use of the company’s rich “chemical raw material warehouse” in the upstream. At the same time, the output of raw material products integrated with “oil and coal” in the upstream will continue to enable high value-added products in the downstream.
The company’s 1.6 million T / a high-performance resin and new material project uses the existing refining, coal chemical and chemical raw materials and products in Hengli (Dalian Changxing Island) Industrial Park for further deep processing, and relies on the comprehensive development advantages of “large chemical” platform, large-scale, low-cost manufacturing, whole industrial chain and integrated matching The downstream deep processing device with leading process and energy consumption indicators transforms the raw materials, intermediate products and bulk products produced by the upstream chemical platform into all kinds of high value-added chemical new material industry chain products, and transmits them to all kinds of downstream new material industries, so as to promote the construction of the whole industry chain of the company’s high-end chemical new material business system and the improvement of scarce production capacity, Implement the company’s development strategy of “improving the upstream and strengthening the downstream” and accelerate the upgrading to the development mode of “platform + new materials”.
The company’s annual output of 2.6 million tons of high-performance polyester project makes full use of the two polyester raw materials of PTA and ethylene glycol produced by Dalian Changxing Island base, which has the advantage of low cost and helps to realize the industrial vertical layout of differentiated fiber, functional film, high-performance industrial silk and new polyester materials. The two major projects will further consolidate the synergy depth and industrial thickness of the new chemical materials business sector of listed companies, optimize the market coverage, reduce enterprise business risks and improve profitability.
2. Hengli Petrochemical Co.Ltd(600346) there are sufficient reserves of projects under construction, and the company has high growth
Hengli Petrochemical Co.Ltd(600346) (Huizhou) 5 million T / a PTA project is planned to be completed and put into operation in the second quarter of 2022. After reaching production and efficiency, the project will achieve annual sales of more than 21.2 billion yuan and total annual profit of about 1.2 billion yuan; After the project with an annual output of 800000 tons of functional polyester film and functional plastics reaches production and efficiency, it is expected to realize an average annual total profit of about 2.9 billion yuan; The annual output of 450000 tons of PBS biodegradable plastics project of Kanghui new materials, a subsidiary, has a broad demand prospect due to the introduction of the “plastic restriction order”; The 1.5 million T / a green multifunctional textile new material project invested by Jiangsu Xuanda polymer materials Co., Ltd., a subsidiary company, will further enhance the comprehensive competitive strength of the whole polyester chemical fiber industry chain of the company; Market layout of degradable plastics of the supporting company for the construction of adipic acid project with an annual output of 300000 tons; On December 26, 2021, Hengli Petrochemical Co.Ltd(600346) wet diaphragm production line equipment procurement signing ceremony was held in Hengli (Suzhou) Industrial Park. The subsidiary Kanghui new materials will introduce 12 wet lithium battery diaphragm production lines from Japan Zhipu Machinery Co., Ltd. and Qingdao Zhongke Hualian new materials Co., Ltd., with an annual capacity of 1.6 billion square meters, marking Hengli Petrochemical Co.Ltd(600346) entering the field of lithium diaphragm, Overweight chemical new energy materials market. The company will continue to contribute to performance increment after sufficient projects under construction are put into operation.
3. Profit forecast, valuation and rating of the company
We maintain the company’s profit forecast for 21-23 years. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 17.108/21.231/23.462 billion yuan respectively, equivalent to EPS of 2.43/3.02/3.33 yuan / share, maintaining the “buy” rating.
4. Risk warning
The progress of new production capacity is less than expected, the global economic recovery is less than expected, international crude oil prices fluctuate, and environmental protection policy risks.
