Jiangsu Eastern Shenghong Co.Ltd(000301) (000301)
Event 1: on November 22, the company has made a second feedback to the CSRC on the review of sierbang M & A.
Event 2: on November 30, the second phase propane industrial chain project in Sri Lanka ushered in a key node. The air separation unit was successfully started at one time and the 260000 T / a acrylonitrile (III) unit was successfully handed over, marking that the project officially entered the production preparation stage.
Event 3: in November 21, the first batch of start-up units of Shenghong 16 million ton refining and chemical integration project entered production preparations such as equipment commissioning and pipeline purging. Some core units have been commissioned and officially put into use. It is expected to successfully realize commissioning by the end of the year.
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Sierbang completed the second feedback on M & A, and the business synergy improved the company’s core competitiveness: sierbang is a large private petrochemical enterprise focusing on the production of high value-added olefin derivatives. Its products include Propylene downstream derivatives such as acrylonitrile and MMA, as well as ethylene downstream derivatives such as EVA and EO, of which the main product EVA has a production capacity of 300000 t / A Acrylonitrile has an annual production capacity of 520000 tons / year, is in the leading position in the industry, and has formed a diversified product structure for the coordinated development of basic petrochemical and fine chemicals. On November 22, 2001, the company has made secondary feedback to the CSRC on the merger and acquisition of sierbang and replied to relevant questions. Among them, the EO expansion and transformation project has completed the relevant approval procedures such as filing and energy saving evaluation, and the merger and acquisition project of sierbang has been steadily promoted. Through this transaction, the company will place high-quality assets with strong profitability, further expand its main business, increase the proportion of olefin derivative business with high added value, and give full play to the synergy between refining and chemical integration project and silbang petrochemical.
Sri Lanka acrylonitrile plant has been successfully delivered to China, and the high prosperity of wind power industry is expected to increase the demand for acrylonitrile: acrylonitrile is an important raw material for the development of new material industry in China, mainly used in ABS resin and other fields, with a small amount used in carbon fiber field. After China’s “double carbon” target was put forward, new energy industries such as wind power generation developed rapidly, and the demand for acrylonitrile and downstream carbon fiber materials continued to increase. According to the data of Baichuan Yingfu, at present, China’s carbon fiber production capacity is about 41800 tons / year, and the corresponding acrylonitrile raw material required is about 80000 tons. With the gradual implementation of the planned capacity of carbon fiber of each company, the proportion of carbon fiber in the downstream application field of acrylonitrile is expected to continue to increase in the future. In addition, with the expansion of carbon fiber application fields and the improvement of penetration in existing application fields, the market scale of carbon fiber may exceed expectations in the future, so as to further improve the demand for acrylonitrile. On November 30, 2001, the second phase propane industrial chain project in Sri Lanka ushered in a key node, and the air separation unit was successfully started at one time 260000 T / a acrylonitrile (III) the successful intermediate handover of the plant marks the formal entry of the project into the production preparation stage. After the project is put into operation, the overall acrylonitrile production capacity of the company will increase from 520000 T / A to 780000 T / A, ranking first in China, further consolidating the company’s leading position in the acrylonitrile industry. Under the background of rapid development of the wind power industry, the gradual expansion of carbon fiber production capacity has driven the steady growth of acrylonitrile demand, It is expected to bring certain performance increment to Sri Lanka.
The refining and chemical integration project is expected to be put into commissioning at the end of the year 21, and the company’s performance is expected to increase significantly: in November 21, the first batch of start-up units of Shenghong 16 million ton refining and chemical integration project entered production preparations such as equipment commissioning and pipeline purging. Some core units have been commissioned and officially put into use, and the commissioning is expected to be successfully realized at the end of the year. At that time, the company will officially open up the “refining chemical fiber” industrial chain and complete the industrial layout from “one drop of oil” to “one silk”, and the performance is expected to increase significantly. In addition, in September 2021, the national development and Reform Commission agreed that Shenghong refinery would use 16 million tons of imported crude oil per year, including 2 million tons, 15.89 million tons and 16 million tons from 2021 to 2023, which would also help to ensure the operation of the project. As the leading project of Jiangsu Lianyungang Port Co.Ltd(601008) national petrochemical industry base, Shenghong refining and chemical integration project will greatly improve the domestic supply rate of high value-added and scarce chemical products such as olefins and aromatics in China, and provide raw material guarantee for the subsequent “chain extension” development of new energy, new materials, electronic chemistry, biotechnology and other strategic emerging industries.
The prosperity of EVA industry is expected to continue, and the performance of Sri Lanka is expected: under the background of reaching a consensus on the global dual carbon goal, the photovoltaic demand is released rapidly. As of October 2021, the cumulative installed capacity of photovoltaic power generation in China has reached 282gw, a year-on-year increase of 23.7%. In mid October, under the power and production restriction policy, the downstream operating rate declined and the EVA price fell. However, due to the great difficulty in the production of photovoltaic grade EVA, high barriers, long expansion cycle and difficult to control, the short-term new supply is limited, the future supply-demand mismatch pattern is expected to continue, and the price rise of EVA will continue to be optimistic in the future. As one of the few manufacturers in China that have the ability to produce EVA for photovoltaic, Sri Lanka’s performance is expected to increase significantly.
Profit forecast, valuation and rating: we maintain the company’s profit forecast from 2021 to 2023. It is estimated that the company’s net profit from 2021 to 2023 will be RMB 1.848/71.28/9.6 billion respectively, equivalent to EPS of RMB 0.38/1.47/1.99, maintaining the “buy” rating.
Risk warning: risk of sharp fluctuation of product price; Downstream demand is lower than expected; The new project is put into operation less than expected; The reorganization progress is less than the expected risk.
