\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Event: Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) released the main business data from January to February 2022. According to the preliminary accounting of the company, from January to February 2022, the company achieved a total operating revenue of about 5.3 billion yuan, an increase of about 75% year-on-year; The net profit attributable to shareholders of listed companies was about 1.6 billion yuan, an increase of about 110% year-on-year.
The boom of main products is rising, and the volume and price rise together to promote performance growth. The company’s main business includes nitrogen fertilizer, organic amine, adipic acid, acetic acid and polyol. Since 2022, driven by the rise of crude oil prices, the prices of the company’s main products have increased to a certain extent, and the profitability is also stronger than that in the same period last year. According to the data of Zhuo Chuang information, from January to February 2022, the average prices of urea, DMF and adipic acid were 2579 yuan / ton, 16916 yuan / ton and 13723 yuan / ton respectively, with a year-on-year increase of 31.12%, 74.48% and 66.46%. In addition, since last year, the company’s series of technical transformation projects for increasing production and improving quality of dimethyl carbonate and 300000 tons of DMC and 300000 tons of caprolactam units have been put into operation, bringing incremental sales this year. The simultaneous rise in the volume and price of products promoted the growth of the company’s revenue and profit in the first two months.
The pressure of raw material cost is relieved, and the leading competitiveness of coal chemical industry is expected to be improved under high oil prices.
Since 2021, with the rising demand and supply constraints, the prices of crude oil, coal and other bulk commodities have risen sharply, which not only promotes the price rise of various chemical products, but also brings great cost pressure to the company. Since the fourth quarter of 2022, under a series of national regulatory policies, China’s coal prices have fallen rapidly, and the pressure on the company’s raw material costs has been alleviated. In the future, as the main body of China’s energy, the price of coal is expected to remain relatively stable under the regulation of the national supply expansion policy. Since the fourth quarter of 2021, the global crude oil price has further increased and gradually entered the high oil price range. The recent conflict between Russia and Ukraine has further exacerbated the tension of global crude oil supply. In the case of high crude oil prices, the cost advantage of coal chemical enterprises is expected to appear and their competitiveness is expected to be improved. Relying on advanced coal gasification technology, the company has created a flexible polygeneration production mode of “one line and many heads”, which can flexibly adjust the product structure according to the industry situation, with significant comprehensive cost advantages. Under the pressure of high oil price in the chemical industry, the company has better profit elasticity.
New products are launched one after another to ensure the long-term growth of the company. In recent years, the company has continued to promote new products and projects, which has brought a solid foundation for the long-term growth of the company. In 2021, the company’s 300000 t / a dimethyl carbonate project was put into operation, realizing the layout of the company’s new energy track. In addition, the 300000 t / a caprolactam project in the company’s amide and nylon new material project will be put into operation in 2021, and the subsequent 200000 t / a nylon 6 slicing project, 200000 t formic acid and 480000 t ammonium sulfate production capacity will be put into operation in the first half of 2022, bringing incremental growth to this year’s performance. At the same time, the company has arranged 80000 tons of nylon 66 high-end new materials and 120000 tons / year PBAT degradable plastic projects. At present, the project has been completed. In addition, the company’s Jingzhou second base project is progressing smoothly and is expected to be gradually put into operation in the middle of 2023. The base is planned to have a production capacity of 1 million tons / year urea, 1 million tons / year acetic acid, 150000 tons / year methylamine and 150000 tons / year DMF. Many new projects have brought a solid foundation for the company’s long-term growth.
Profit forecast and investment suggestions: it is estimated that the company’s EPS in 2021 and 2022 will be 3.43 yuan and 3.68 yuan, and the PE will be 8.89 times and 8.31 times respectively based on the closing price of 30.54 yuan on March 15. Give the company an investment rating of “overweight”.
Risk tip: the product price has fallen sharply, and the progress of new projects is lower than expected
