\u3000\u3 Bohai Water Industry Co.Ltd(000605) 589 Jinan Shengquan Group Share Holding Co.Ltd(605589) )
China’s leading enterprise in the integration of synthetic resin, composite materials and biomass chemical industry. In terms of synthetic resin and composite materials, the production and marketing scale of phenolic resin and furan resin of the company ranks first in China and in the forefront of the world. By the end of 2020, the production capacity is 360000 tons / 100000 tons respectively, accounting for about 25% / 22% of the Chinese market. In terms of biomass chemical industry, the company has the biomass refining technology with independent intellectual property rights to realize 100% utilization of plant straw, and 1 ton of straw can produce 1 ton of high value-added products. At the same time, lignin and hemicellulose can be used to make lignin phenol and furfural for the production of furan and phenolic resin, forming an integrated industrial chain of biomass chemical industry and synthetic resin, which has significant industrial synergy, scale, technology and cost advantages.
The development of phenolic resin functional new materials releases the growth space. The company is the largest supplier of electronic resin for PCB substrate materials in China, and its electronic phenolic resin for PCB accounts for 70% of the Chinese market. Linear phenolic resin for photoresist breaks the foreign monopoly and is the only supplier in China who can supply phenolic resin for TFT photoresist in batch. The 230000 ton phenolic resin and high-end electronic chemical projects invested by IPO will accelerate the layout of high-end refined resin. In the future, the added value and technical barriers of products will continue to improve, which is expected to fully benefit from the opportunities of downstream demand growth and domestic substitution, and release the growth space of the company.
The demand for furan resin continues to grow, and the self-sufficiency rate of raw materials is further improved. The foundry industry is booming, and the consumption of furan resin is growing steadily. It is expected that the consumption of furan resin in China will reach 488000 tons in 2024. With the continuous promotion of carbon neutralization action, considering the future installed demand of wind power, the corresponding demand for furan resin is about 62000 tons. The company has opened up the industrial chain of “corncob furfural furfuryl alcohol furan resin”, and some main raw materials in the upstream have been self supplied. Furan resin has a significant cost advantage and the gross profit margin is maintained at more than 30%. In the future, the one million ton straw integration project of Daqing production base will increase the furfural production capacity by 25000 tons / year, and the self-sufficiency rate of raw materials and cost advantages will be further expanded.
Biomass chemical industry promotes the upgrading of industrial chain and has broad prospects. The total investment is 1.55 billion yuan to build a 1 million ton / year biomass refining integration project in Daqing. The first phase of the project plans to purchase 500000 tons of biomass raw materials such as corn straw locally every year. The downstream products include natural color sanitary paper, natural color large axis paper, furfural, acetic acid and potassium salt. At the same time, the by-product biochar can be used for self heating. It is expected that the project is expected to contribute a considerable profit increment after it is put into operation.
Investment suggestion: for the first time, give “overweight” rating. We expect the net profit of the company to be 703 / 9.9/1.41 billion yuan from 21 to 23, with a year-on-year increase of – 19.82% / 41.12% / 42.05%. Excluding the additional shares, the corresponding EPS is 0.91/1.28/1.82 yuan, and the current stock price corresponds to pe34.00 yuan 63 / 24.54/17.28x.
Risk warning: the production of projects under construction is less than expected, and the price of chemicals falls
