Satellite Chemistry (002648)
Satellite chemistry is a leading enterprise in light hydrocarbon chemical industry. C3 industrial chain has built integration advantages, and C2 industrial chain has obvious cost advantages relying on ethane cracking route. In the context of carbon neutralization, we believe that the by-product hydrogen of light hydrocarbon chemical industry will provide resource advantages for the company’s future expansion.
Core view
Under the background of carbon neutralization, blue hydrogen provides resource advantages for expansion: under the background of carbon neutralization, light hydrocarbon chemical industry has two advantages: one is low energy consumption and low process emission, so its own capacity expansion is not limited. Second, the raw materials of light hydrocarbons are hydrogen rich raw materials. Blue hydrogen is a by-product in the production process, which can provide extremely cheap hydrogen for the products involved in hydrogenation reaction extending to the downstream of the company. In the context of high coal and natural gas prices, the blue hydrogen route will create the capacity on the far left of the cost curve.
C3 industrial chain has the advantage of integration: the high view of acrylic acid is expected to continue. From the supply side, the industry has completed the reshuffle, with Cr5 exceeding 60%, and there is no new capacity planning in the industry, and the operating rate has increased from the past 50% to 73%. The demand side is expected to maintain stable growth. As a leading enterprise, the company has built the whole industrial chain layout from propane to polypropylene, acrylic acid and ester, as well as downstream polymer new materials in C3 industrial chain. Compared with peers, the company’s gross profit margin of acrylic acid and ester is 20 PCT higher for a long time, that is, the cost is about 1400 yuan / ton, and the cost advantage is obvious.
Cost of ownership advantage of ethane cracking: in May 2021, Jiangsu Lianyungang Port Co.Ltd(601008) Petrochemical phase I project was successfully started, marking the company’s successful entry into the C2 industrial chain. Compared with the coal head and oil head routes, the ethane cracking route selected by the company has obvious cost advantages. According to our calculation, the tax free full cost of ethane cracking route is 2230 yuan / ton and 1481 yuan / ton lower than that of Northwest coal head and oil head respectively. The cash cost excluding tax is also 1030 yuan / ton and 1612 yuan / ton lower than that of Northwest coal head and oil head respectively. Jiangsu Lianyungang Port Co.Ltd(601008) Petrochemical phase II is expected to be put into operation in 2022, which will further enhance the company’s competitiveness in C2 industrial chain. Financial forecast and investment suggestions
Based on the judgment of the industry prosperity and the rhythm of the company’s production expansion, we predict that the company’s earnings per share from 2021 to 2023 will be 3.54 yuan, 5.00 yuan and 6.36 yuan respectively. According to the 12 times PE of comparable companies in 2022, the target price of 59.94 yuan and buy rating are given for the first time.
Risk statement
The project progress is less than expected; Demand declines; The price of raw materials fluctuates greatly; Product price fluctuation risk.
