\u3000\u3000 China Jushi Co.Ltd(600176) (600176)
Terminate the 100000 ton glass fiber construction project in India without changing the process of internationalization strategy
On February 8, the company announced that affected by the covid-19 epidemic in India, the company terminated the construction project of a new 100000 t / a alkali free glass fiber tank kiln wire drawing production line in India and changed to a new 120000 T / a glass fiber tank kiln wire drawing production line construction project in Egypt (reviewed and approved by the board of directors and the general meeting of shareholders in 21 years). We believe that the termination of investment and construction in India is a decision made by the company after comprehensively considering the macro environment and the actual situation of the investment project. The company will also continue to promote the site investigation and research of new overseas projects, and the internationalization strategy is still advancing steadily. At present, the Indian project of the company only leases land locally, and the project construction has not been started. When the project is terminated, only the land lease contract needs to be terminated. After repeated communication between the company and the land lessee MIDC, MIDC has recently returned the remaining land lease amount of 960 million rupees (about 81.518 million yuan) to Jushi India after deducting various fees such as land service fees, totaling 62 million rupees (about 5.325 million yuan at the exchange rate on February 8). In addition, the company has not paid any large fees for the project, and other contracts signed by the company have been terminated according to law. There is no major risk and liability of default. The impact of terminating the Indian project is generally controllable.
The 150000 ton short cut precursor project is proposed, and the product structure is expected to be further optimized
At the same time, the company announced that it plans to invest in the construction of 150000 ton glass fiber chopped strand production line in Chengdu intelligent manufacturing production base. The construction is planned to start in 22h1, with a construction period of one year, and is expected to be put into operation in 23h1. The total investment of the project is about 1.8 billion. After completion, it is expected that the annual revenue / total annual profit will be 900 million / 380 million respectively. In recent years, the performance of short cut precursor products in the composite material market for automobiles and household appliances has been relatively strong. The products are structurally in short supply in many markets around the world, and it is expected to maintain a high growth rate in the future. After the project is implemented, the product structure of the company can be further optimized. In fact, the company continues to increase the proportion of high-end products (wind power / thermoplastic / electronic yarn, etc.), while high-end products have better growth / profitability, which is expected to enhance the company’s anti cyclical and profitability.
The industry cycle is expected to weaken and the company’s market share is expected to continue to increase
We expect that the new capacity of the industry will be limited in 22 years, and the roving / electronic yarn will be about 42 / 100000 tons respectively. With the overall improvement of the demand side, we expect that the roving boom in 22 years is expected to continue, and the price center of electronic yarn will fall, but it is still expected to maintain a good level. In the medium and long term, under the “dual control of energy consumption”, it is more difficult for the industry to increase new production capacity, the landing uncertainty increases, and the growth rate of the supply side of the industry may slow down; Driven by wind power, automobile, electronics and other fields, the demand side grew steadily; We judge that the tight balance between supply and demand in the industry is expected to normalize. The company’s production capacity has expanded steadily. We expect that the 100000 ton electronic yarn / 120000 ton roving production line in Egypt is expected to be put into operation at the end of 22q2 / 22 respectively, and the market share of the company is expected to further increase.
Investment suggestion: we predict that the net profit attributable to the parent company will be 6.4/6.5/6.8 billion yuan in 21-23 years, maintaining the original profit forecast, corresponding to 10.5 / 10.4 / 9.9 times of the current share price PE. Considering that the industry cycle is expected to weaken, the company’s internationalization strategy continues to advance, the production capacity expands steadily, the product structure is optimized, and the “overweight” rating is maintained.
Risk warning: the demand is less than expected; The new production capacity of small enterprises exceeded expectations; The price of medium and high-end products fell more than expected.
