\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 176 China Jushi Co.Ltd(600176) )
Event:
China Jushi Co.Ltd(600176) announced the operation from January to February 2022. From January to February 2022, the total profit of the company increased by more than 60% year-on-year.
Comments:
The high increase in total profit was mainly due to the substantial year-on-year increase in the price of glass fiber roving. The company announced that up to now, the production capacity of the company’s production bases outside China has been operating at full capacity, the roving production and sales rate has maintained a high level, the inventory level has continued to maintain a historical low, the sales price has increased steadily month on month, the production and operation situation is stable and good, and the total profit from January to February 2022 has increased by more than 60% year-on-year. We judge that the high growth of the company’s total profit from January to February of 22 years is mainly due to the substantial year-on-year increase in the price of roving products. According to the data of Zhuo Chuang information, from January to February of 22 years, the average price of glass fiber winding direct yarn increased by about 13% year-on-year, the average price of glass fiber jet ply yarn increased by about 40% year-on-year, and the average price of electronic yarn increased by about 4% year-on-year. Therefore, it is judged that the company’s glass fiber roving price increased significantly year-on-year, resulting in a high increase in the company’s total profit from January to February of 22 years.
The high boom of roving helps the price rise steadily, and the overseas demand remains strong. The company’s announcement mentioned that from January to February 2022, the glass fiber industry still maintained a high outlook, and the demand of downstream new energy vehicles, wind power and infrastructure maintained growth. Strong downstream demand supported the steady rise in the price of glass fiber roving. According to the data of Zhuo Chuang information, since the beginning of 2022, the price of glass fiber roving has remained stable on the whole, and the price of individual varieties has increased slightly, which proves that the demand for roving is still in a high outlook, and the supply and demand pattern is still tight.
In terms of overseas markets, there was strong demand from January to February of 22 years, which continued the high outlook of 21 years. In 2021, the total export volume of China’s glass fiber and products was 1.713 million tons (year-on-year + 25.2%), a record high, which has exceeded the pre epidemic level (1.59 million tons, 1.54 million tons and 1.33 million tons respectively in 20182020). In December 21, China’s export volume of glass fiber and products was 169000 tons, a year-on-year increase of + 52%. The rapid growth of export volume in 21 years has provided important support for the tight supply and demand pattern of China’s glass fiber market, and then supported the resilience of glass fiber roving price. The company’s announcement mentioned that from January to February 2022, the demand for roving at home and abroad showed an upward trend, especially the strong demand in overseas markets such as Europe and the United States, and the company’s mainstream roving products were in short supply. Therefore, it is judged that the export volume has maintained a high growth rate since the beginning of 22 years, which continues to form a strong support for China’s supply and demand pattern. In the future, we need to continue to pay attention to the changes in the year-on-year growth rate of export volume, which may become an important variable affecting China’s glass fiber price.
The price of electronic yarn continued to fall, and the new production capacity impacted the supply and demand pattern. The price trend of electronic yarn is different from that of glass fiber roving. Since 21q4, the price of electronic yarn has continued to decline. Taking the price of Taishan glass fiber G75 electronic yarn as an example, the price has fallen from the high point of 17000 yuan / ton in 21q3 to the current 10000 yuan / ton. The price of electronic cloth has dropped from the high point of 8-9 yuan / m to about 4 yuan / m. According to the data of Zhuo Chuang information, we estimate that the new output of China’s electronic yarn in 22 years is expected to be 185000 tons. It is judged that the new supply in the field of electronic yarn will significantly exceed the new demand in 22 years, thus forming a market pattern of oversupply, and the prices of electronic yarn and electronic cloth may fall further.
In 22-23 years, the company’s production capacity will continue to expand. The company will build Tongxiang electronic line 3 in 22 years, add an annual output of 100000 tons of electronic yarn capacity, and is expected to ignite in the middle of 22 years. According to the announcement of the company on February 8, 22, the company will start the construction of Chengdu base in the first half of 22, with an annual output of 150000 tons of glass fiber chopped precursor production line, and the construction period of the project is one year. According to the company’s “14th five year plan”, it is expected that the company will build a total production capacity of nearly 1.7 billion meters of electronic cloth during the “14th five year plan” (it is estimated that the company’s sales volume of electronic cloth in 21 years is about 440 million meters), and the roving production capacity is expected to increase to about 3.5-4 million tons (it is estimated that the company’s sales volume of roving in 21 years is about 2.25 million tons). The continuous growth of production capacity will help the company to continuously improve the market share, maintain the leading edge in the industry, and provide a new source for the continuous growth of the company’s revenue and net profit.
Profit forecast, valuation and rating: we are optimistic about the company’s cost advantage in the roving field and the logic of increasing the proportion of high-end products in the future. At the same time, we are concerned about the continuous improvement of the market share of the company’s electronic cloth business. The company is expected to replicate the cost advantage in the roving field in the electronic cloth field and create a new source for the company’s long-term profit growth. We maintain the company’s EPS forecast of 1.40 yuan, 1.54 yuan and 1.56 yuan from 2021 to 2023. The current price corresponds to the dynamic P / E ratio of about 11x in 2021, maintaining the “buy” rating.
Risk warning: the demand for glass fiber is less than the expected risk; Risk of falling price of glass fiber products; Risk of rising raw fuel prices; Risk of exchange loss caused by exchange rate fluctuation; Risks of overseas subsidiaries affected by local policies, etc.
