\u3000\u3000 Tongkun Group Co.Ltd(601233) (601233)
Event: on January 28, 2022, the company issued an announcement on the advance increase of annual performance in 2021. It is estimated that the net profit attributable to the parent company will reach 7.2-8 billion yuan in 2021, with a year-on-year increase of 4.35-5.15 billion yuan, an increase of + 152.94% – 181.04%; The net profit deducted from non parent company was 7.19-7.99 billion yuan, with a year-on-year increase of 4.42-5.22 billion yuan, an increase of 159.86% – 188.77%.
The annual performance increased rapidly, and Zhejiang Petrochemical contributed high profits. According to the calculation, the company expects to realize the net profit attributable to the parent company of 1.039-1.839 billion yuan in the fourth quarter of 2021, with an average of 1.439 billion yuan, which is higher than the level in the same period of 2020, but lower than the profit in the third quarter of 2021. Throughout the year, the company’s high profit growth was mainly due to the production of Zhejiang Petrochemical phase II project, which brought high profits due to the ramp up of production capacity; At the same time, with the commissioning of all units of Zhejiang Petrochemical phase II in 2022, the profitability of the company is expected to be further improved.
In the short term, the filament price difference is expected to continue to rise and promote the prosperity of the industry. Affected by the correction of oil price and double control production restriction, the filament price fell from October 2021, and the price difference narrowed accordingly. Since late December 2021, affected by geopolitics and the decline of U.S. crude oil inventory, the crude oil price has stopped falling and rebounded, driving the filament price to rise and the price difference to rise. We believe that under the support of cautious capital expenditure, limited supply and sustained recovery of demand, crude oil prices are expected to continue to rise in 2022, providing cost support for filament prices; At the same time, with the gradual relaxation of overseas epidemic prevention and control and the mitigation of maritime transportation, the export demand of textile and clothing is expected to improve marginally, which will drive the recovery of filament price difference, and the prosperity of the industry is expected to continue to improve, driving the company’s profitability upward.
In the medium and long term, capacity expansion will drive the continuous growth of the company’s profits. As of the first half of 2021, the company’s Polyester polymerization capacity is about 7.8 million tons / year and polyester filament capacity is about 8.3 million tons / year. For more than ten consecutive years, it has achieved the first output and sales volume in China and the international market. The Chinese market share of polyester filament accounts for about 20% and the international market share exceeds 12%. In addition, the company’s new projects have been steadily promoted: (1) the integrated project with an annual output of 5 million tons of PTA and 2.4 million tons of polyester spinning in dongyangkou port, Nantong, Jiangsu has been fully launched, some monomers have been capped, the first poly spinning unit has entered the full installation stage, and entered the commissioning stage in the fourth quarter of 2021; (2) Jiangsu Shuyang has basically completed the approval of the project with an annual output of 2.4 million tons of filament (staple fiber), 500 texturing machines, 10000 looms, supporting dyeing and finishing and public thermal energy center, and the pile foundation construction of thermal power phase I, CP1 poly spinning, three-dimensional warehouse and 220kV general step-down substation has been completed; (3) The company and Gulei Petrochemical plan to jointly invest in the integrated project with an annual output of 2 million tons of polyester fiber, 500 elastic machines and 2000 looms. With the production of the company’s new capacity, the company has a significant scale effect and its profitability is expected to continue to improve.
Investment suggestion: according to the company’s performance forecast and the launch speed of production capacity, we adjusted the net profit attributable to the parent company from 2021 to 2023 to 7.7/10/10.9 billion yuan, corresponding to 6 / 5 / 5 times of the closing price on January 28, 2022. Considering the growth brought by the second phase production capacity climb of Zhejiang Petrochemical and the company’s polyester production capacity expansion, we maintained the “recommended” rating.
Risk warning: the risk of crude oil price fluctuation; The risk of the impact of epidemic disturbance on textile and clothing demand; Risk of slow delivery of new capacity
