\u3000\u3000 Tongkun Group Co.Ltd(601233) (601233)
Performance review
Tongkun Group Co.Ltd(601233) issued the announcement on the advance increase of annual performance in 2021 on January 28, 2022. It is expected to realize the net profit attributable to the parent company of 7.200-8 billion yuan in 2021, with a year-on-year increase of 152.94-181.04%; The net profit deducted from non parent company was 7.190-7.990 billion yuan, with a year-on-year increase of 159.86-188.77%.
Business analysis
Zhejiang Petrochemical continues to release performance in phase I, and the operation of phase II is expected to continue to promote growth, with high performance and strong growth certainty. Zhejiang Petrochemical phase I was put into operation at the end of 2019. Considering the complexity of integrated devices, it did not reach full capacity in 2020. Zhejiang Petrochemical phase I continued to promote performance growth in 2021. At the same time, Zhejiang Petrochemical phase II announced its full production on January 13, 2022. Considering the complexity of downstream deep processing units, Zhejiang Petrochemical phase II probably did not contribute large-scale performance in 2021. Zhejiang Petrochemical phase II performance is expected to be released gradually from 2022 to 2023. With the gradual production of phase II downstream deep processing projects, There is significant incremental space in Tongkun Group Co.Ltd(601233) investment income.
Large volume production capacity continues to be at a low level of prosperity, with significant flexibility in performance. In 2021, the average price difference of pta-px was at the historical level of 8.3%, and the average price difference of filament PTA was at the historical level of 73.7%. With the slowdown of the production rate of large-scale PTA new capacity, Tongkun’s performance was significantly flexible.
Large scale deep processing projects are arranged in the downstream of Zhejiang Petrochemical phase II project, which increases the added value of products and is expected to weaken the periodicity of performance: the downstream of Zhejiang Petrochemical phase II project is arranged with a large amount of new material deep processing projects, and the scale of chemical plants is larger than that of phase I, including a large amount of photovoltaic grade EVA, DMC, PC, ABS and other new materials widely used in photovoltaic, new energy vehicles and other new materials, Driven by the global “double carbon” policy, the terminal consumption demand of new energy related materials is high and the growth certainty is strong. The full operation of Zhejiang Petrochemical phase II project is expected to further weaken the Tongkun Group Co.Ltd(601233) performance periodicity. At the same time, due to the complexity of large-scale deep processing projects and integrated devices, Zhejiang Petrochemical phase II is likely to contribute only primary products to profits.
Investment advice
We expect the net profit from 2021 to 2023 to be RMB 7.63/11.8/13.144 billion, corresponding to EPS of RMB 3.2/4.65/5.45 and PE of 6.5x/4.49x/3.8x, maintaining the “buy” rating of the company.
Risk tips
1. Risk of one-way large-scale decline in crude oil; 2. Serious deterioration of terminal demand 3 Geopolitical risk 4 The construction progress of the project is less than expected Risk of large fluctuation of US dollar exchange rate 6 Other force majeure effects
