\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: in 2021, the company achieved an operating revenue of 145538 billion yuan, a year-on-year increase of 98.19%; The net profit attributable to the parent company was 24.649 billion yuan, a year-on-year increase of 145.47%. Among them, the net profit attributable to the parent company in the fourth quarter was 5.107 billion yuan, a year-on-year increase of 8.84% and a month on month decrease of 15.04%.
Comments:
The volume and price increased simultaneously, and the performance increased year-on-year. The cost control of “reducing cost and improving efficiency” was obvious. In 2021, the global chemical product market demand was boosted, but some overseas devices were affected by extreme weather, epidemic and other factors, resulting in significant fluctuations in the global chemical supply chain, phased imbalance between supply and demand, and increased global chemical product prices. In 2021, the company’s Yantai MDI unit technical transformation, million tons of ethylene and other new production capacity and new units were put into operation, the company’s product volume and price rose simultaneously, and the performance increased significantly. The gross profit margin of sales was 26.26%, a year-on-year decrease of 0.52pct, basically the same as that in 2020; During the period, the expense rate (including R & D) was 5.22%, a year-on-year decrease of 4.97pct, and the net sales interest rate was 17.20%, a year-on-year increase of 3.02pct. The company achieved remarkable results in the management theme of “reducing cost and improving efficiency” in 2021. The net cash flow from operating activities was 27.922 billion yuan, a year-on-year increase of 65.71%.
MDI prices are high and booming, and Yantai expands production and increases sales. In 2021, the production and sales of polyurethane series of the company were 401 / 3.89 million tons respectively, with a year-on-year increase of 37.40% / 32.73%, mainly due to the launch of the new production capacity of 1.1 million tons of MDI in Yantai and the increase in the sales of polyether polyols, as well as the increase in the utilization rate of production capacity to 100%. The gross profit margin of polyurethane series was 35.07%, with a year-on-year increase of 0.61pct. By 2021, the company’s polyurethane production capacity was 4.16 million tons. In 2021, some MDI devices were affected by extreme weather, epidemic and other factors, resulting in phased imbalance between supply and demand and rising MDI prices. According to wind, in 2021, the average price of aggregated MDI / pure MDI was 19870 (YoY + 37.45%) / 22342 (YoY + 25.27%) yuan / ton, the volume and price of main products increased simultaneously, and the performance increased significantly. In terms of TDI, the average price of TDI in 2021 is 14462 yuan / ton (YoY + 17.79%). According to statista, the global TDI demand is expected to reach 2.77 million tons in 2022, and the TDI unit in Fujian Industrial Park will be promoted as scheduled. The net profit of BC subsidiary is RMB 4.782 billion. We analyze that on the one hand, the overseas MDI, TDI and other products are in high boom in 2021, and the sales are supported by China’s goods transfer (and mother liquor). In terms of polyether, the company’s PO / SM independent technology has been industrialized successfully. With the improvement of the company’s propylene oxide industrial chain, the company’s Polyether integration advantages and synergy with MDI have been continuously strengthened. By the end of the reporting period, the company’s polyether production capacity was 860000 tons. We expect that the company’s polyether production capacity will continue to grow in 2022, driving business development with composite materials and product solutions.
The ethylene project was completed and put into operation, and the profit of petrochemical reached a new high. In 2021, the production and sales volume of petrochemical series of the company were 4 / 3.9 million tons respectively, with a year-on-year increase of 79.49% / 74.81%, mainly due to the production of one million tons of ethylene plant, which increased the sales volume of petrochemical products. At the same time, the rise of crude oil price superimposed on the global phased imbalance between supply and demand, resulting in the rise of petrochemical product price. During the reporting period, the average price of propylene in Shandong was 7904 yuan / ton (YoY + 16.39%); The average price of propylene oxide in Shandong is 16551 yuan / ton (YoY + 38.81%); Shandong butanol average price 12269 yuan / ton (YoY + 100.54%); The average price of acrylic acid in East China is 11902 yuan / ton (YoY + 72.23%); The average price of butyl acrylate in East China is 16348 yuan / ton (YoY + 95.78%); The average price of imported hydrogenation of East China NPG is 17071 yuan / ton (YoY + 84.98%); The average price of PP wire drawing in East China is 8633 yuan / ton (YoY + 9.98%); The average price of LLDPE membrane grade in East China is 8464 yuan / ton (YoY + 15.64%); The average price of East China Ethylene PVC is 9624 yuan / ton (YoY + 37.94%). The gross profit margin of petrochemical series was 17.09%, with a year-on-year increase of 9.45pct, which was mainly due to the sharp rise in the price of petrochemical products year-on-year and the change in product structure and scale effect caused by the production of one million tons of ethylene. The annual report of the company disclosed for the first time that the net profit of the subsidiary Wanhua Chemical Group Co.Ltd(600309) (Yantai) Petrochemical Company was 5.170 billion yuan. According to the difference between the company’s business data announcement and the sales volume of petrochemical Series in the annual report, we expect that the company’s LPG trade volume will exceed 6 million tons in 2021, and the operation efficiency of the resource pool of “light assets and high turnover” will be prominent. With the PVC products of BC company, the profit of petrochemical series reached a new high.
The profit of functional chemicals is strong, and the growth of emerging materials can be expected. In 2021, the production and sales volume of the company’s fine chemicals and new materials series were 790 / 76000 tons respectively, with a year-on-year increase of 37.97% / 37.01%, mainly due to the growth of sales volume of ADI, waterborne resin and TPU business. The gross profit margin of fine chemicals and new materials series was 21.25%, with a year-on-year increase of 2.31pct, which was mainly due to the gradual imbalance between supply and demand, resulting in the increase of product price greater than that of raw material price. According to our analysis, especially in the overseas market, due to the impact of extreme weather and epidemic, there was a phased supply shortage of adiponitrile and hexanediamine, the price of HDI increased more, and the gross profit margin increased significantly. According to wind, the middle price of HDI Trimer in East China rose from 52500 yuan / ton at the beginning of the year to 115000 yuan / ton, an increase of 119.05%. We believe that the functional chemicals division represented by Adi is still the main profit point and growth point of fine chemicals and new materials. According to the EIA, Wanhua Ningbo has newly built a 50000 T / a HDI monomer production unit and a 60000 T / a adduct production unit, so that the whole plant has a 100000 t / a HDI monomer production capacity. In terms of PC, as of the end of the reporting period, the company’s PC production capacity was 210000 tons, the capacity utilization rate was 75%, which was at the leading level in China, the product sales brand and the number of customers increased significantly, and the powder business achieved a new breakthrough.
Investment suggestion: Wanhua Fujian’s 400000 tons of new capacity and Ningbo’s Shanghai Pudong Development Bank Co.Ltd(600000) tons of expanded capacity are expected to be completed and put into operation by the end of 2022 / 2023 respectively, and Wanhua’s MDI market share is expected to further increase; The new renewable energy and raw material energy will not be included in the total energy consumption control, and the second ethylene plant is expected to accelerate; Establish Wanhua Penglai Co., Ltd. to build 900000 tons of propylene and downstream projects; Continuously deepen cooperation with Ningxia to promote the cluster development of spandex industry and the high-end development of new material industry; Join hands with Baowu carbon industry to enter the polyacrylonitrile based carbon fiber market, which has a broad market space. In 2021, the company’s R & D expenditure was 3.168 billion yuan, with a year-on-year increase of 55.07%. In 2022, the company’s management theme was “talent year”. Driven by technological innovation, the company will continue to focus on the future and strengthen its growth. Based on the updated information of the annual report and the expectation of MDI price fluctuation, we adjusted the company’s net profit attributable to the parent company from 2022 to 2023 to 25.56 billion yuan and 28.58 billion yuan respectively (the previous value was 26.32 billion yuan and 28.25 billion yuan respectively), increased the predicted value of 2024 to 31.32 billion yuan, and the PE was 10.1x/8.8x/8.1x respectively, maintaining the “buy” rating.
Risk warning: the price of products and raw materials fluctuates greatly; The production progress of the project does not meet the expectation; Safety and environmental protection factors.
