\u3000\u300 Shenzhen Fountain Corporation(000005) 9 North Huajin Chemical Industries Co.Ltd(000059) )
Event: on March 10, 2022 local time, Saudi Aramco has made the final investment decision, and its joint venture Huajin Aramco Petrochemical Company will participate in the development of large-scale integrated refining and chemical units in Northeast China. Huajin Aramco Petrochemical Company is a joint venture of Saudi Aramco, northern Huajin Chemical Group and Panjin Xincheng industrial group. The joint venture will develop a combined unit for crude oil to chemicals.
Comments:
Together with Saudi Aramco, the group’s refining and chemical project is expected to advance rapidly: on March 10, 2022 local time, Saudi Aramco issued a statement that its joint venture Huajin Aramco Petrochemical Company will participate in the construction of large-scale refining and chemical integration project in Northeast China. The crude oil processing capacity of the project is 300000 barrels / day (equivalent to 15 million tons / year), which is expected to be put into operation in 2024. In addition, Saudi Aramco will provide up to 210000 barrels / day (equivalent to about 10 million tons / year) of crude oil for the project to ensure the crude oil supply of the project North Huajin Chemical Industries Co.Ltd(000059) as the only petrochemical listed company under China ordnance industry group and one of China’s super large integrated petrochemical enterprises in oil refining and chemical industry, it has obvious advantages in production scale and vertical integration. Saudi Aramco’s refining and chemical integration project is shared by North Huajin Chemical Group, the holding subsidiary of the group’s ordnance industry group. North Huajin Chemical Industries Co.Ltd(000059) is expected to participate in the construction of the project in due time. At that time, the competitiveness of the company’s petrochemical and fine chemical sectors will be significantly improved.
Supporting complete production facilities and forming large-scale advantages: North Huajin Chemical Industries Co.Ltd(000059) is an important production enterprise of refined oil, intermediate petrochemical products, synthetic resin and urea in China, with independent public works, environmental protection system and supporting facilities for railway transportation and road transportation. The company has formed a production scale of 8 million tons / year oil refining, 500000 tons / year ethylene, 1 million tons / year road asphalt, 900000 tons / year lubricating oil base oil and 1.32 million tons / year urea. As of March 11, 2022, the price of polyethylene, the company’s main chemical product, was 9090 yuan / ton, up + 4.36% from the beginning of the year; The price of urea is 2902 yuan / ton, up + 13.7% from the beginning of the year; The price of diesel oil was 7914 yuan / ton, up + 8.2% from the beginning of the year; The price of ABS is 14700 yuan / ton, which is – 1.0% higher than that at the beginning of the year; The price of polypropylene was 9320 yuan / ton, up + 14.6% from the beginning of the year.
At present, Pb is less than twice, and the valuation repair space is expected: from the perspective of Pb valuation, the valuation level of state-owned chemical enterprises is always lower than that of the chemical industry as a whole, and the current valuation level of state-owned chemical listed enterprises, especially the central enterprises listed in chemical industry, is at the bottom of history. The company’s share price has continued to decline since the second half of 2017, and pb-mrq fell below 1.0 at the end of May 2018. The company’s share price fell back after a slight rebound in early 2019 and entered a stable period. Although the company’s share price has increased since mid-2020, the overall Pb valuation is still at the bottom level. As of March 11, 2022, the company’s pb-mrq is only 0.82 times. With the continuous promotion of large-scale refining and chemical integration projects in Northeast China, the growth space of the company is gradually opened, and the future valuation is expected to be repaired.
Profit forecast, valuation and rating: we maintain the company’s profit forecast. It is estimated that the company’s net profit from 2021 to 2023 will be RMB 884 / 1033 / 1165 million respectively, and the corresponding EPS will be RMB 0.55/0.65/0.73/share respectively. Maintain the “buy” rating.
Risk tips: crude oil price fluctuation risk, raw material price fluctuation risk, new capacity launch schedule is less than expected risk, main product price fluctuation risk
