\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Key investment points
Event: the company released the main operating data from January to February 2022, achieving a total operating revenue of about 530 million yuan, a year-on-year increase of about 75%, and a net profit attributable to shareholders of listed companies of about 1.6 billion yuan, a year-on-year increase of about 110%.
The boom of main products is high, and the pressure on raw materials has eased. According to the data of Zhuo Chuang information, the average prices of urea, DMF, acetic acid, adipic acid, ethylene glycol, n-butanol and octanol have changed by + 4.6%, + 4.2%, – 26.7%, + 6.6%, – 5.6%, – 7.1%, – 1.2% respectively since the beginning of 2022. The product boom remains high, the power coal of raw materials has decreased by 23.5% month on month, and the pressure on raw materials of the company has eased. Recently, the national development and Reform Commission issued a notice on further improving the price formation mechanism of the coal market, giving guidance on the mining price of coal from major producing areas, which is conducive to guiding the coal price to operate within a reasonable range, and enhancing the stability of the company’s profit in 2022.
The new materials business contributes to the increment and looks forward to the performance of the whole year. The company’s caprolactam and dimethyl carbonate products were successfully put into operation in October 2021, contributing considerable performance increment to the company. The caprolactam project has an annual output of 300000 tons of caprolactam and 480000 tons of ammonium sulfate. The subsequent 200000 tons of nylon 6 slicing device is still under construction and is expected to be put into operation in the first half of 2022; Dimethyl carbonate (DMC) project has an annual output of 300000 tons of dimethyl carbonate, of which the purity of electronic grade products reaches 4N, which can be used as electrolyte solvent.
Breakthroughs have been made in Dec and EMC Research and development, and high-end solvents are ready to go. In January, 2022, the company announced that the research and development of methyl ethyl carbonate (DEC) and diethyl carbonate (EMC) had been successful, the product adopted the transesterification process, the test device had opened up the process flow, and the product quality reached the electronic standard. In addition, according to the announcement of Dezhou Municipal Development and Reform Commission, the company’s high-end solvent project has been filed by the national development and Reform Commission. The project plans to invest 1.03 billion yuan and the construction period is 20212023. After the project is implemented, the company will have DMC 6 million tons / year, dec3 million tons / year and EMC 5 million tons / year, becoming a leading electrolyte solvent manufacturer in China.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 3.44 yuan, 3.88 yuan and 4.21 yuan respectively. In view of the huge technical advantages of the company’s coal chemical industry, the industrial chain will be fully extended and the downstream high value-added products will be distributed. The second base will be located in Jingzhou to replicate the low-cost advantages and maintain the “buy” rating.
Risk warning: the commissioning progress of the new project is less than expected, and the price of raw materials may fluctuate sharply.
