\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 309 Wanhua Chemical Group Co.Ltd(600309) )
Event: Wanhua Chemical Group Co.Ltd(600309) released the annual report of 2021. During the reporting period, the company achieved operating revenue of 145538 billion yuan (year-on-year + 98.19%) and net profit attributable to the parent company of 24.649 billion yuan (year-on-year + 145.47%). Among them, 2021q4 company achieved an operating revenue of 38.219 billion yuan (year-on-year + 57.92%, month on month – 3.64%), and a net profit attributable to the parent company of 5.107 billion yuan (year-on-year + 8.84%, month on month – 15.04%).
In 2021, the company grasped the great year of the chemical industry cycle. With the launch of new production capacity, the product volume and price of the three sectors increased simultaneously, and the performance increased significantly. Although the rising cost of raw materials in 21q4 put some pressure on the profit side, the boom continued. Overall, in 2021, the company’s main products benefited from the mismatch between supply and demand in this round of chemical business cycle. Overseas unconventional monetary policy + fiscal stimulus supported the rapid recovery of residential consumption, and China’s “export substitution” played an obvious role. According to the data of China Customs and the announcement of the company, the total export volume of MDI and TDI in 21 years reached 1.01 million and 370000 tons, with a year-on-year increase of + 65% and + 44%, a record high, The export price continued to rise, and the prosperity can be seen from the increase in the net profit of BC subsidiary (4.78 billion in 21 years, with a year-on-year increase of + 3.09 billion yuan). The company seized the opportunity to make a positive contribution to the performance of Yantai MDI technical transformation and capacity expansion and large ethylene production capacity in 21q1, and the polyurethane and petrochemical units were close to full load operation throughout the year.
Since 21q4, the capacity gap of isocyanate in Europe and America has been gradually repaired, and the supply and demand tend to be balanced. Our market tracking data show that the comprehensive tax inclusive price difference of MDI of polyurethane products of the company is 16500 yuan / ton (year-on-year – 15%, month on month + 7%), TDI price difference is – 26%, month on month + 2%, rigid foam polyether price difference is + 29% year on year, month on month + 10%, and the prosperity is still high; The comprehensive price difference Q4 of petrochemical C3 / C4 platform was – 23% month on month, and the comprehensive price difference Q4 of C2 platform was – 16% month on month. Oil and coal drove up the price of raw materials and processing costs, which put some pressure on the profit side. TPU, PC and PMMA of new materials performed better. From the perspective of production and sales, according to the announcement, the sales volume of 21q4 polyurethane sector was + 12% year-on-year, with a chain comparison of – 3%, the output of petrochemical sector was + 130% year-on-year, with a chain comparison of + 38% (simulated deduction of LPG trade), the sales volume of new materials sector was + 31% year-on-year, with a chain comparison of + 13%. The successful industrialization of independent technologies such as PO / SM, continuous DMC polyether and ternary cathode materials also brought new increment; In addition, due to the change of accounting standards, the transportation expenses were included in the cost and the impairment of fixed assets of Fujian TDI device was nearly 900 million yuan. Finally, 21q4 company realized a gross profit of 6.53 billion yuan and the expense rate (four fees & taxes) was 0.4% (Mom – 7.6pct).
Kostron and Huntsman’s 22-year performance guidelines are optimistic, short-term new increment is insufficient, and the leading position of the company continues to strengthen. Although negative expectations such as soaring oil prices and massive stagflation caused by the recent conflict between Russia and Ukraine continue to ferment, resulting in negative pressure, the price rise of overseas isocyanate raw materials is transferred downstream in the form of energy surcharge, and the operating rate is not affected, which has been reflected in the latest performance guidelines of kostron and Huntsman. According to the financial reports of various companies, kostron 22q1 ebtida is expected to be 750 ~ 850 million euros (743 / 663 million euros for 21q1 / Q4 respectively), 2.5 ~ 3 billion euros in 22 years (3.085 billion euros in 21 years, and 22 years’ expected year-on-year + 500 million euros in energy cost). The adjusted ebtida of Huntsman polyurethane sector 22q1 is expected to be 200 ~ 220 million dollars (218 million dollars for 21q4), and the high boom continues, As the oligopoly of isocyanate industry, the guidelines of the two enterprises are forward-looking, and China’s isocyanate market was strong in January and February. According to Tiantian chemical, the price difference of TDI increased significantly month on month due to the shutdown and maintenance of Yinguang and Juli devices. We are optimistic about the subsequent performance of the company.
In terms of new increment, according to the financial reports of various companies, hensman geismar separator project is expected to be completed in 22q2. The project belongs to MDI product structure adjustment and non incremental release; On the other hand, covestro capex expects to increase by 100200 million euros in 2023 (or corresponding to 50000 tons of Tarragona in Spain), and the expenditure peak will occur in 2025. It is estimated that 1.5 billion euros (or corresponding to Shanghai Pudong Development Bank Co.Ltd(600000) tons of MDI expansion project in Shanghai), which has limited short-term impact on the market; Other increments such as BASF (90000 tons in Caojing, Shanghai) and Jinhu, South Korea (200000 tons) are expected from 2023 to 2024. Therefore, in the medium and long term, the investment of MDI new production capacity basically matches the growth rate of demand, while Wanhua, as the main incremental force ( Shanghai Pudong Development Bank Co.Ltd(600000) in Ningbo + 1.6 million in Fujian), will continue to consolidate the industry pattern of “one super and many strong” with the advantage of scale and cost.
We will continue to increase capital expenditure and R & D investment, and continue to develop new projects. According to the announcement, the cash paid by 21q4 company for the purchase and construction of fixed assets, intangible assets and other long-term assets reached 8.054 billion yuan, and the R & D expenditure in 2021 reached 3.168 billion yuan, a record high. The construction of new projects continued to advance. According to sinochem.com, on February 25, the Wanhua high-end fine chemicals integration project was officially started in Yantai Industrial Park. The total investment of the project is 14.5 billion yuan. The main construction contents include the construction of 400000 tons of pochp unit, 48000 tons of citral unit, 100000 tons of methylamine unit, 50000 tons of TMP unit The annual output of 200000 tons of maleic anhydride unit, 60000 tons of NPG phase III unit, polyurethane curing agent unit, 850000 tons / year polyether polyol expansion unit and its supporting public and auxiliary facilities. After the completion of the project, the expected sales revenue is 28 billion yuan. In addition, according to the official website of the Anti Monopoly Bureau of the State Administration of market supervision, Wanhua plans to establish a new joint venture with Baowu carbon industry in Zhejiang, Zhejiang Baowan Carbon Fiber Co., Ltd., to enter the polyacrylonitrile (Pan) based carbon fiber market, in which Baowu carbon industry holds 51% equity and Wanhua Chemical Group Co.Ltd(600309) holds 49% equity. With the gradual implementation of new projects, the long-term growth momentum of the company can be expected.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 23.11 billion yuan, 25.70 billion yuan and 28.47 billion yuan, maintaining the Buy-A investment rating.
Risk tip: the price of products or raw materials fluctuates sharply, the downstream demand is less than expected, and the project progress is less than expected.
