\u3000\u3000 Rongsheng Petro Chemical Co.Ltd(002493) (002493)
Event: on January 28, 2022, the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will reach 12.5-13.3 billion yuan in 2021, with a year-on-year increase of 71.03% – 81.98%; The net profit deducted from non parent company was RMB 11.8-12.6 billion, with a year-on-year increase of 85.95% – 98.56%.
Benefiting from the commissioning of phase II of Zhejiang Petrochemical, the company’s performance increased significantly. According to the calculation, the company expects to realize the net profit attributable to the parent company of 2.38-3.18 billion yuan in the fourth quarter of 2021, with an average of 2.78 billion yuan, a year-on-year increase of 43.4% – 91.6%, and a slight decrease compared with the third quarter of 2021, mainly due to the impact of oil price fluctuations on product prices and the impact of the “dual control” policy. Throughout the year, benefiting from the commissioning of Zhejiang Petrochemical phase II project and the ramp up of production capacity, the company achieved high profit growth.
In the short term, Zhejiang Petrochemical’s phase II capacity climb will continue to thicken the company’s performance. According to the company’s announcement, the first batch of units (atmospheric and vacuum distillation and related utilities) of Zhejiang Petrochemical phase II project have been put into operation in November 2020. By mid January 2022, the oil refining, aromatics, ethylene and downstream chemicals units of phase II project have been fully put into commissioning and the whole process has been opened. Therefore, we believe that with the opening of the whole process, Zhejiang Petrochemical phase II will start to fully contribute to the production capacity in 2022 and continue to thicken the company’s performance.
In the medium and long term, relying on the large refining and chemical platform, promote the company to upgrade to a comprehensive platform of new materials and fine chemicals. After the second phase of the project was put into operation throughout the year, Zhejiang Petrochemical added 20 million tons / year of oil refining capacity, 6.6 million tons / year of aromatics and 1.4 million tons / year of ethylene production capacity; On the one hand, it will help alleviate the shortage of some new energy, new materials and raw materials, and ensure the safety of the supply chain of relevant industries in China; On the other hand, Zhejiang Petrochemical will also provide sufficient raw material guarantee and expansion space for the company to further develop the downstream high value-added new materials and fine chemical industry in the future. The company’s multi product lines expand new materials and fine chemical business: (1) polyester sector: traditional sector, stronger than PTA and PX. At present, the company has a pet1.3 million T / A, a total of 940000 T / A for FDY and POY, 350000 T / A for DTY, 250000 T / A for polyester film, 9.6 million T / A for PX and 13.5 million T / A for PTA. (2) Polyolefin: after Zhejiang Petrochemical phase II project is put into operation, the company will have ethylene production capacity of 2.8 million tons / year and styrene production capacity of 1.9 million tons / year, and will continue to expand downstream. (3) Engineering plastics (PC): the company has formed a PC product with the layout of the whole industrial chain, with a polycarbonate production capacity of 520000 tons / year, a supporting phenol production capacity of 290000 tons / year and an acetone production capacity of 140000 tons / year; (4) New energy materials (e.g. EVA): Zhejiang Petrochemical phase II has planned a joint production capacity of 100000 / 300000 tons of EVA / LDPE, which has been put into operation at the end of 21. (5) Rubber sector: Zhejiang Petrochemical phase II is equipped with butadiene production unit, which can further extend the industrial chain to SBS, ABS and other rubber fields after being put into operation.
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 RMB 127 / 185 / 21 billion, corresponding to 10 / 7 / 6 times of the closing price on February 7, 2022. Taking into account the growth brought by Zhejiang Petrochemical phase II production capacity climbing and the company’s polyester production capacity expansion, we maintained the “recommended” rating.
Risk warning: the risk of crude oil price fluctuation; Risk of price decline of main products; The risk of slow delivery of new capacity.
