Jiangsu Eastern Shenghong Co.Ltd(000301) (000301)
Event: according to the announcement of the audit results of the 34th meeting of the merger and reorganization committee of China Securities Regulatory Commission in 2021, Jiangsu Eastern Shenghong Co.Ltd(000301) (issuing shares and paying cash to purchase 100% equity of Jiangsu silbang Petrochemical Co., Ltd. and raising supporting funds and related party transactions) was unconditionally approved.
Transaction method: according to the report on issuing shares and paying cash to purchase assets and raising supporting funds and related party transactions previously disclosed by the company, the company plans to purchase 100% equity of sierbang by issuing shares and paying cash, with a transaction price of 14.36 billion yuan; And issue shares to no more than 35 qualified specific investors to raise matching funds. Among them, the issuing price of the shares issued by the company for the purchase of assets is proposed to be RMB 11.14/share, and the number of shares issued under the purchase of assets is proposed to be RMB 1.112 billion. If calculated according to the closing price of RMB 23.10 on December 21, 2021, the market value may be increased by RMB 25.687 billion; In addition, the supporting funds raised are planned to be RMB 4.089 billion, and the price shall not be lower than 80% of the average trading price of the company’s shares in the 20 trading days before the first day of the issuance period.
Injection of high-quality assets and further expansion of business territory: sierbang is an enterprise focusing on the production of high value-added olefin derivatives. At present, the company has put into operation 2.4 million T / a MTO unit, and phase II 700000 T / a PDH unit is being actively promoted. Sri Lanka’s main products include 780000 T / a acrylonitrile (according to the announcement on the company’s official website, the third set of acrylonitrile unit was successfully handed over in China) and 300000 t / a EVA (including 200000 tons of photovoltaic grade), 170000 tons / year MMA, 420000 tons / year EO and its derivatives, among which the production capacity of acrylonitrile and EVA is in the leading position in the industry. According to the announcement, the net profit attributable to the parent company in 2019, 2020 and 2021h1 is 943 million yuan, 527 million yuan and 2041 million yuan respectively. The smooth completion of this asset injection will enable Sri Lanka to achieve better development relying on Shenghong refining and chemical platform Industrial coordination (ethylene, propylene, vinyl acetate, etc. are expected to provide for themselves) will broaden the profit space; meanwhile, Shenghong will further expand the company’s business territory with the help of silbon’s successful layout in the downstream of new materials.
The whole industrial chain of refining and chemical industry + Polyester + new materials has been overweight, and the leading growth attribute has been further strengthened: the company has gradually implemented the vertical integration of the industrial chain from “one silk”, and gradually formed four business segments: petrochemical, polyester, new materials and thermoelectricity. Petrochemical includes 16 million tons of refining and 3.9 million tons of PTA capacity. Polyester currently has 2.3 million tons of differentiated polyester fiber capacity. After the successful delivery of new materials in Sri Lanka, it has 2.4 million tons of MTO and 700000 tons of PDH capacity. The company has many projects under construction and proposed to be built, including POSM and polyol projects, 3 million tons of functional fiber projects, Ruibang 25 + 25 recycled fiber projects, etc. Vertically, the company enriches its product layout and broadens its industrial chain. Horizontally, the company continues to increase its capacity expansion. While optimizing industrial synergy and stabilizing its leading position, the company is expected to continue to open up growth space.
Investment suggestion: without considering the future changes in share capital and assuming that the successful injection of silbon in early 2022 will drive the performance growth of listed companies. We expect the net profit of the company from 2021 to 2023 to be RMB 2.161 billion, RMB 10.336 billion and RMB 17.245 billion respectively, giving the investment rating of buy-a.
Risk warning: the progress of projects under construction is less than expected, the risk of delaying the purchase of asset restructuring plan, the risk of product price fluctuation, the risk of centralized supply in the new material industry, and the risk that the demand is less than expected due to repeated epidemics.
