Wanhua Chemical Group Co.Ltd(600309) (600309)
Event: Wanhua Chemical Group Co.Ltd(600309) announced the listing price of MDI in China in January 2022. Since January 2022, the listing price of aggregated MDI in China is 21500 yuan / ton (no change compared with December 2021); the listing price of pure MDI is 22500 yuan / ton (1300 yuan / ton lower than the price in December 2021).
comment:
Demand weakened a few years ago, and MDI prices corrected in the off-season. As of December 24, 2021, the price of aggregate MDI is 19350 yuan / ton, The price of pure MDI increased by 100 yuan / ton (+ 0.52%) on a weekly basis and 500 yuan / ton (+ 2.65%) on a monthly basis; the price of pure MDI increased by 900 yuan / ton (+ 4.56%) on a weekly basis and 1400 yuan / ton on a monthly basis (- 6.35%). On the supply side, Wanhua Ningbo’s 1.2 million ton MDI unit is subject to routine maintenance, and the overall supply in China and overseas is relatively stable and sufficient. On the demand side of polymerized MDI, most of the external wall pipe insulation industry in the North has been shut down, and some projects in the south are ending at the end of the year; on the demand side of pure MDI, the starting load of spandex is 80-90%, about 50-60% of TPU and 30-40% of sole stock and slurry , the overall start-up remained low, coupled with repeated outbreaks outside China, the overall demand side impact was more prominent.
Exports to the United States maintained a high growth, and the MDI export boom continued. According to China Customs, in November 2021, China’s aggregate MDI export volume was 78400 tons, a year-on-year increase of 42.4%. The chain grew by 5.8%, and the United States remains the largest export destination. From January to November 2021, China’s aggregate MDI export volume was 939000 tons, a year-on-year increase of 72.6%; In November 2021, China’s net MDI export volume was 11400 tons, a year-on-year decrease of 5.8%. Growth of 33.7% month on month. From January to November 2021, China’s net MDI export volume was 111100 tons, a year-on-year increase of 23.7%. We analyze that overseas MDI devices are generally old, and the power and supply chain system are fragile. Under the influence of extreme weather, epidemic and other factors, the probability of force majeure of overseas devices still exists, and MDI exports are expected to continue to grow at a high rate.
New energy vehicles are expected to stimulate demand, and the synergistic effect of polyether expansion is strengthened. With the rapid development of new energy vehicles, the demand for polyurethane materials in the fields of interior decoration, coatings and batteries of new energy vehicles is expected to increase rapidly. At the same time, we are optimistic about the demand increment such as building insulation and light-weight and large-scale wind power blades for a long time. The environmental impact assessment of 850000 tons of polyether expansion of the company is publicized. With the improvement of the company’s propylene oxide industrial chain, the company’s Polyether integration advantages and synergy with MDI are expected to continue to strengthen.
Investment suggestion: Based on the expectation of MDI price reduction, we adjusted the net profit attributable to the parent company from 2021 to 2023 to 25.1 billion yuan, 26.89 billion yuan and 28.78 billion yuan respectively (the previous values were 25.83 billion yuan, 29.62 billion yuan and 31.88 billion yuan respectively), and PE was 12.7x/11.9x/11.1x respectively, maintaining the “buy” rating.
Risk warning: the price of products and raw materials fluctuates greatly; The production progress of the project does not meet the expectation; Safety and environmental protection factors
