China Petroleum & Chemical Corporation(600028) (600028)
Event: the company issued the announcement on connected transactions, 1) the company plans to purchase equity assets, non equity assets and liabilities of the production and operation business of China Petroleum & Chemical Corporation(600028) Group Asset Management Co., Ltd. with RMB 4.43 billion; 2) Yizheng Chemical fiber, a wholly-owned subsidiary of the company, plans to purchase non equity assets and liabilities such as PBT resin business of Yizheng branch held by the asset company and the equity of two companies held by the asset company with RMB 1.14 billion; 3) The company plans to purchase non equity assets and liabilities such as thermal power business held by Yanshan Group with RMB 1.47 billion.
comment:
The company spent more than 7 billion to acquire assets such as PBT resin to further enhance business synergy: the company’s acquired assets include thermal power, water Non equity assets such as PBT resin and equity assets such as anqing Shuguang (25% equity), Qimin energy (90% equity), Yihua Bona (40% equity) and Yihua Dongli (50% equity). Asset based method is adopted for the acquisition of assets such as asset company, Yizheng Chemical fiber and group Yanshan (except that Anqing Shuguang equity adopts the income method) the appraisal price is RMB 4.43 billion, RMB 1.14 billion and RMB 1.47 billion respectively, and the value-added rate is 34%, 41% and 4% respectively. See the attached table for the financial data of the assets acquired by the asset company, Yizheng Chemical fiber and Yanshan Group. The total net profits of the assets acquired by the company in 2019, 2020 and January April 2021 are RMB – 0.3 billion, RMB 373 million and RMB 322 million respectively, which has a marginal impact on the company’s performance The impact is small, which is mainly conducive to further improving the integrated operation level of the company, realizing the optimal allocation of resources and business synergy, and reducing related party transactions as a whole.
Continue to distribute new downstream materials and create new growth momentum: with the mitigation of the epidemic, the demand for PBT resin widely used in automobile, electronics and electrical appliances continues to strengthen, and the industry prospect is very broad. The petrochemical asset management Yizheng branch acquired by the company now has 140000 T / a PBT capacity and 30000 T / a PBAT capacity. It is the fifth largest PBT resin manufacturer in China. Its product quality and energy consumption are at the leading level in China. Its brand has been confirmed in the market outside China. Its 120000 t / 60000 t pbxt flexible transformation project is in the EIA stage, After putting into operation, it is expected to further expand the production scale of PBT, reduce the operation cost and consolidate its leading position in the Chinese market. Benefiting from the promotion of national policies, the demand for degradable plastics in China continues to grow and the market scale continues to rise. Yizheng Bona acquired by the company can also rely on the supporting advantages of Yizheng Chemical fiber PBAT raw materials and utilities to develop downstream PBAT degradable plastic series products and further improve its profitability in the future. In addition, the Yihua Dongli joint venture acquired by the company has a PET production capacity of 23000 tons / year with advanced technology and leading quality. Its products are widely used in optics, electronics and other fields. At present, China’s special functional polyester film depends on import and its price is high, so there is a huge demand for import substitution in the future.
Profit forecast, valuation and rating: we maintain the profit forecast of the company. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 71.647/73.378/75.352 billion yuan respectively, equivalent to EPS of 0.59/0.61/0.62 yuan / share respectively, and maintain the “buy” rating of A-Shares and H shares.
Risk tip: there is a significant downward risk in crude oil price and a downward risk in the prosperity of oil refining and chemical industry
