\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Excellent cost control, rising profit low, and the downward cycle highlights profit toughness: after more than 20 years of development, the company has formed a complete industrial chain of coal chemical industry, and its downstream products include urea and melamine derived from synthetic ammonia; Acetic acid, organic amine, DMF derived from methanol, coal to ethylene glycol and coal to DMC. In addition, the company has expanded the petrochemical industry chain on the basis of coal chemical industry. Adipic acid, PBAT, nylon 66 and nylon 6 projects derived from pure benzene, flexible production line and multi product collaborative development strategy enable the company to maximize benefits. The company has always been committed to the control and continuous optimization of production cost. These cost control measures include the selection of coal gasification technology route, the accumulation of scale effect of coal gasification capacity, continuous technical improvement and other aspects, constantly raising the cost advantage barrier of the company’s production platform and widening the gap with competitors.
Jingzhou base built the second Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , and the adjustment of energy consumption dual control policy opened the ceiling of medium and long-term growth: subject to the limitation of Shandong coal index, the company’s coal gasification capacity expansion was limited, and the company focused on building the second production base in Jingzhou. On January 13, 2021, the board of directors of the company unanimously approved two proposals on the construction of Park gas power platform project and synthetic gas comprehensive utilization project in Jingzhou Jiangling economic development zone. As the first phase project of Jingzhou base, the total investment of the two projects is 11.528 billion yuan. It is planned to be put into operation by the end of 2023. The adjustment of energy consumption dual control policy and the exclusion of raw material energy consumption from the total energy consumption control have greatly alleviated the pressure on the company’s carbon emissions. In the future, the approval threshold for new capacity of high-quality projects is expected to decline, opening the ceiling of the company’s medium and long-term growth.
Transformation of new materials and extension of industrial chain layout to high value-added products: relying on the cost advantages accumulated in the field of traditional coal chemical industry, the company continues to extend vertically along the industrial chain, develops in the field of new materials with faster downstream demand growth, higher added value and broader market space, and copies the advantages of industrial chain integration and scale of the company to the field of new materials, so as to further optimize the product structure of the company, Enhanced the profitability of the company. At present, the new material direction of the company includes 200000 tons of nylon 6 chips, 80000 tons of nylon 66 high-end new material project, PBAT degradable plastic project, DMC, EMC and other high-end solvent projects. The centralized operation of the project in the next two or three years will significantly increase the company’s performance.
Profit forecast and investment suggestion: the company is one of the most competitive companies in the coal chemical industry, with leading technology and cost advantages and obvious integration advantages. Relying on the flexible coal gasification platform, the company continues to extend to the downstream field of high value-added new materials, and plans a number of new material projects such as high-end solvent, PA66 and degradable plastics. The company’s product structure is continuously optimized and its profitability is continuously improved. We estimate that the company’s revenue from 2021 to 2023 will be 26.647/27.71/31.603 billion yuan respectively; The net profit attributable to the parent company is 7.266/67.78/7.869 billion yuan respectively, and EPS is 3.44, 3.21 and 3.73 yuan / share. The corresponding PE valuation of the current stock price is 8.8/9.4/8.1 times respectively. It is covered for the first time and given a “buy” rating.
Risk tips: the price of chemical products has fallen sharply, the production progress of new projects is less than expected, the price of raw materials fluctuates sharply, and there are risks in production safety.
