Zhejiang Nhu Company Ltd(002001) (002001)
Conclusions and recommendations:
On December 27, the company issued an announcement and signed the letter of intent for joint venture cooperation with China Petroleum & Chemical Corporation(600028) Zhenhai Refining and chemical branch. The joint venture established the company to invest in a set of methionine production facilities, with a total investment of about 3 billion yuan. The shareholding ratio of both parties is tentatively set at 50% and 50%,
As a world-renowned vitamin supplier, the company has made innovations in the fields of nutrition, flavors and fragrances, polymer and other new materials, and has made efforts to build a platform for “chemical +” and “biological +”, to enrich product lines and develop functional chemicals. The company has released new capacity of several projects in the follow-up, and it is expected that the company’s profit will further increase and maintain the “buy” rating.
Improve the industrial layout and help the growth with new projects: the company is a leading methionine enterprise in China. At present, it has a methionine production capacity of 150000 tons. There are 150000 tons of methionine production capacity under construction in Shandong base, which is expected to be released in 2023. The company’s joint venture with Sinopec to build a new methionine production capacity will further consolidate the company’s leading position in the methionine industry, help the company compete with Evonik, Bluestar Adisseo Company(600299) and other enterprises, and become the first echelon of methionine in the world. At the same time, the newly planned methionine production base of the company is located in Ningbo Zhenhai Petrochemical base, with supporting raw materials such as propylene and sulfur, which can further give play to Sinopec’s advantages in raw materials and energy, reduce cost and increase efficiency, and realize the integration of industrial chain.
The main business has a high market share and steady development: the company’s main business vitamin products has a high market share, prominent industry position and obvious brand advantages, and is in a leading market position in China and well-known abroad. The main products include vitamin E, vitamin A, vitamin C, methionine, vitamin D3, biotin, coenzyme Q10, carotenoids, etc. At present, vitamin E is still in the business cycle, and the average price of VE in 21 years has reached 80.32 yuan / kg, yoy + 24%. The subsequent boom is expected to be maintained. At the same time, VA price has been at a low level in recent years and is expected to stabilize and recover.
The new projects have been put into production one after another to ensure sustained growth of their performance: in recent years, the company is committed to building the platform of “chemical +” and “bio +”, and continuously enriches the product line, including three major editions, including nutrition, flavor and fragrance, and polymer new materials. In terms of nutrition, the company’s vitamin B6 and B12 projects are expected to be put into operation in 2022. At that time, the company is expected to cover the whole category of vitamin monomers and help the company become a one-stop manufacturer of nutrition and a provider of combined solutions; Shandong methionine phase II project is expected to be put into operation in 2023. After the new methionine project cooperated by Ningbo and Sinopec is put into operation, the company’s methionine leading position will be further consolidated. The 10 thousand tons of menthol is expected to be put into operation in 2022 with the steady development of the 40 thousand tons flavor and fragrance project in the company’s Shandong base. In addition, based on the polymerization process and downstream application research and development of high-performance resin, the company also develops new materials including PPS and adiponitrile nylon industrial chain, which is expected to become a new profit growth point of the company in the future. Based on the vitamin industry, the company attaches importance to independent R & D and innovation, continues to extend and expand to relevant industrial chains, and forms a functional chemical leading enterprise with multi industry coordination and industrial chain integration. With the continuous production of new production capacity in the future, the company’s performance will continue to grow.
Profit forecast: the company is expected to achieve a net profit of RMB 4.29/5.06/6.02 billion, yoy + 20% / + 18% / + 19%, equivalent to EPS of RMB 1.67/1.96/2.33 in 2021 / 2022 / 2023. At present, the PE corresponding to the A-share price is 18.8, 16.0 and 13.4 times, maintaining the “buy” rating.
Risk tips: 1. The company’s product price is lower than expected; 2. The progress of the project under construction is less than expected.
