Jiangsu Eastern Shenghong Co.Ltd(000301) (000301)
Event: on December 22, 2021, the company announced that the merger and reorganization of Sri Lanka was unconditionally approved by the CSRC.
comment:
Sierbang’s M & A has passed smoothly, and the company is about to open up the whole refining, chemical and fine chemical industry chain: after sierbang’s M & A is completed, the company will place high-quality assets with strong profitability. The main business will further expand and newly increase the R & D, production and sales of value-added olefin derivatives. A series of diversified petrochemical and fine chemicals such as acrylonitrile, MMA, EVA, EO and their derivatives will be added to the main product range, which can give full play to the synergy between refining and chemical integration project and Sri Lanka petrochemical, It helps to enhance the company’s sustainable development ability and core competitiveness. After the successful M & a meeting of sierbang, the company may accelerate the completion of asset delivery and open up the whole refining, chemical and fine chemical industry chain.
Sri Lanka’s main products are in good demand, and its future profits can be expected: with the proposal of carbon neutralization goal and the implementation of relevant policies in various parts of China, the transformation of energy structure will greatly increase China’s photovoltaic installation demand. As the largest EVA producer in China, sierbang’s EVA production capacity accounts for 31% of China’s total production capacity, and will take the lead in benefiting from the downstream demand expansion, with considerable profit space in the future. Secondly, the stricter environmental protection policy will highlight the advantages of the company’s PDH project. The raw material used in the propane dehydrogenation unit is light hydrocarbon propane, and its carbon content and carbon emission are lower than those of petroleum raw materials. At the same time, hydrogen is an important by-product of the process, which can bring more development opportunities to the company. On November 30, 21, 260000 T / a acrylonitrile in Sri Lanka (III) the unit was successfully delivered to CCCC. After being put into operation, its overall acrylonitrile production capacity 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, which is expected to bring some performance increment to Sri Lanka. In 2020, Sri Lanka will achieve a revenue of 10.98 billion yuan and a net profit attributable to the parent company of 530 million yuan; In H1 2021, Sri Lanka achieved a revenue of 9.5 billion yuan and a net profit attributable to the parent company of 2.04 billion yuan.
There are sufficient projects under construction in Sri Lanka and the growth can be expected: the phase II propane industry chain project in Sri Lanka has been steadily promoted, and the capacity under construction includes 700000 T / a propane dehydrogenation unit, 520000 T / a acrylonitrile and 180000 T / a MMA. In addition, Sri Lanka plans to expand EO capacity to 300000 t / A, build 100000 t / a CO2 purification and recovery unit, 100000 t / a EC unit, 70000 T / a DMC unit, 100000 t / a EOD unit, 20000 t / a UHMWPE unit, 800 t / a Poe pilot plant and 100000 t / a CO2 to green methanol unit, Revamp the existing 100000 t / a butadiene unit and increase the production capacity of butene-1 by 390600 T / A. There are sufficient projects under construction, and the performance of Sri Lanka is expected to continue to increase in the future.
Profit forecast, valuation and rating: the company has not completed the delivery of Sri Lanka’s assets and does not consider the impact of Sri Lanka’s performance. Therefore, 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: the product price fluctuates greatly; The new project is put into operation less than expected; The progress of asset delivery is less than expected
