\u3000\u3000 East China Engineering Science And Technology Co.Ltd(002140) (002140)
Leading in the field of chemical engineering construction, coal chemical engineering business welcomes good opportunities for development
The company’s coal chemical industry and chemical engineering business account for more than 90%. We believe that the coal chemical industry is in a period of recovery as a whole. Lithium extraction from Salt Lake and phosphorus chemical industry are also expected to contribute to the project revenue. In the medium and long term, the industrial profit will increase steadily. Coal chemical industry has benefited from the policy setting (raw material energy consumption is not included in the total energy consumption control) and the emergence of economy (the price of crude oil exceeds US $80 / barrel). During the 13th Five Year Plan period, construction projects have been shelved or restarted. According to the 14th five year plan, the investment amount of corresponding projects of coal to oil / natural gas / olefin / ethylene glycol project is 390.6/59.37/414/37.6 billion, and the market share of ethylene glycol project of the company is nearly 70%, Other coal chemical industries also have project experience, which is expected to meet the development opportunity of the business end in the recovery period of the industry.
The engineering side closely follows the market trend and expands the fields of lithium extraction from Salt Lake, titanium dioxide and new energy
1) lithium extraction from Salt Lake: China’s potential engineering space is 53 billion yuan. The construction capacity of 10000 ton project and the speed of reaching production capacity are two major competitive advantages. The company signed an EPC + O 10000 ton order in Tibet in 2021 (construction 2.12 billion + operation 1.07 billion). It is planned to reach production in three years, which is expected to lead the industry. 2) Other projects: at present, titanium dioxide produced by chlorination accounts for 9.1% of the country’s total output. Environmental protection helps the rapid expansion of chlorination, and the company’s chlorination technology has a monopoly advantage; The company signed 40000 t / a iron phosphate EPC, benefiting from the large volume of lithium batteries, and the related business may welcome great development.
The layout of industrial businesses such as PBAT and the introduction of Shaanxi coal engineering and industry are expected to accelerate
The scale of the joint venture PBAT project between the company and Xinjiang Tianye Co.Ltd(600075) is 500000 tons / year. Through the supporting construction of 300000 tons of raw material BDO, the company has locked in the cost and obtained stable profits. The production of 100000 tons of PBAT in phase I has been completed, and Tianye Xiangtai has been established to layout the sales of PBAT. The company is located in Xinjiang region and may have certain advantages in market development, With the improvement of capacity utilization, the company’s profits may gradually increase; The war investment Shaanxi coal group was introduced to promote technology industrialization, issuing 164 million shares in a non-public manner and raising 931 million yuan. After completion, Shaanxi coal group (to subscribe 838 million yuan) will hold East China Engineering Science And Technology Co.Ltd(002140) 20.77% equity and become the second largest shareholder of the listed company. The subsequent layout of PBAT and DMC industries and chemical engineering business is expected to accelerate.
The expansion of traditional advantageous businesses and new businesses can be expected to be covered for the first time and given a “buy” rating
We are optimistic that the prosperity of the company’s traditional business has obviously warmed up, and the new business may usher in rapid volume. It is expected that the company’s eps0.5 in the 21st-23rd year 52 / 0.73/0.90 yuan, net profit of 284 / 397 / 492 million yuan, CAGR + 32% in 21-23 years. At present, the 22-year wind of the comparable company unanimously expects the average PE to be 31.67 times. Considering the stable growth of the company’s engineering business in the future and the medium and long-term industry may have great potential, pe25 times in 22 years and the corresponding target price of 18.21 yuan will be given. It will be covered for the first time and given a “buy” rating.
Risk tip: the release of lithium carbonate capacity is not as expected, the high coal price leads to the weakening of project investment, the replacement speed of titanium dioxide by chlorination is lower than expected, and the capacity of degradable plastics in China may be surplus
