\u3000\u3 China Vanke Co.Ltd(000002) 132 Henan Hengxing Science & Technology Co.Ltd(002132) )
Event: on March 17, 2022, the “120000 ton / year high performance silicone polymer project” built by Xingxing chemical, a subsidiary of Henan Hengxing Science & Technology Co.Ltd(002132) holding company, was successfully put into trial operation. At present, the whole process of the project device has been opened up, and DMC products meeting the needs of customers have been produced and sold. The project is still in the trial production stage, and the products will be sold successively according to the needs of customers, which can bring new operating revenue and operating profit to the company.
The successful trial production of silicone project contributes a new round of growth potential energy. The price of DMC has soared by 40% since the end of last year, exceeding 36000 yuan / ton. The development of emerging industries has led to a significant increase in the demand for silicone. The company introduced the advanced hydrolysis reactor of Qingdao University of science and technology and “200000 ton fluidized bed reactor and supporting engineering technology” into the silicone production line, which ranks first in China in terms of design capacity, output and production efficiency; The location of the project development zone has the advantages of low raw material cost and low transportation cost. It is expected to release 70% – 80% of the production capacity in 2022, significantly improving the profitability of the company.
The production capacity of Vajra line business expanded rapidly to meet the new year of photovoltaic installation. In 2022, the leading enterprises in the upstream silicon link of photovoltaic will actively expand production, simultaneously promote the technological transformation of the industrial chain and reduce the cost of scale. With the gradual release of silicon supply, the downstream installed demand is expected to increase significantly in 2022. By the end of 2021, the company has an annual production capacity of 12 million kilometers of diamond line, and the new production capacity is being put into operation rapidly. After the construction of the new production capacity, the annual production capacity will reach 46 million kilometers, which is at the leading level in the industry. With the double expansion of supply and demand, the company’s diamond line business will grow rapidly.
Investment suggestion: the company’s traditional steel strand and steel cord business operates steadily, and the diamond wire business expands rapidly with the downstream installation demand; The release of production capacity of silicone project will help the company make multi line efforts. We expect the company to achieve revenue of RMB 3.108/76.00/9.256 billion and net profit attributable to parent company of RMB 162/7.61/1.026 billion from 2021 to 2023, corresponding to pe4.7 billion 77 / 8.87/6.58, with a “buy” rating.
Risk warning: the demand for photovoltaic installation is less than expected; The downstream demand of silicone was lower than expected.
