\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 117 China National Chemical Engineering Co.Ltd(601117) )
The company is a national team in the field of chemical engineering, which can provide the whole process services from R & D and design to construction and operation. Its performance has continued to grow in recent years. The actual controller of the company is the state owned assets supervision and Administration Commission of the State Council. The company is a national team in the field of chemical engineering, inheriting most design institutes and construction companies under the former Ministry of chemical industry, and participating in the construction of most basic chemical, coal chemical, petrochemical and other projects in China. In recent years, adhering to the diversified development strategy, the company has gradually expanded its business scope from chemical engineering to environmental governance, infrastructure and other fields, and vigorously developed industrial and new material business and modern service industry driven by innovation. Since 2017, the company’s performance has witnessed continuous growth, and its operating revenue has increased from 58.571 billion yuan in 2017 to 109995 billion yuan in 2020, with a compound annual growth rate of 23.42%; The net profit attributable to the parent company increased from 1.557 billion yuan in 2017 to 3.659 billion yuan in 2020, with a compound annual growth rate of 32.95%. In the first three quarters of 2021, the company’s performance continued to grow. By the end of November 2021, the company had accumulated 317.68 billion yuan of newly signed contracts, an increase of 21.7% compared with the same period last year. The company is also expected to maintain a steady growth trend.
Focus on building “double carbon” overall solutions. Under the double carbon development strategy, the company has great growth space. The company attaches great importance to the industrial opportunities brought by double carbon, makes a strategic layout in the field of double carbon, and establishes China National Chemical Engineering Co.Ltd(601117) carbon neutralization science and Technology Research Institute to carry out scientific and technological research and industrial application in the directions of carbon neutralization, catalysis and green process, high-end new chemical materials, chemical environmental protection and so on around the clean and low-carbon energy structure, the synergy of multi-energy complementary industries, and the improvement of industrial process energy efficiency. At present, the company has also developed and participated in the construction of a number of double carbon projects, including carbon dioxide resource utilization, waste hydrogen production, liquid hydrogen storage, etc. in the future, the company can not only carry out carbon reduction and green upgrading of existing chemical and petrochemical projects, but also integrate carbon cycle process in incremental projects to promote the low-carbon development of the chemical industry. Under the dual carbon development strategy, the company is expected to become an important supplier of carbon neutralization solutions in China.
Innovation drives development, deeply cultivates industries with technical barriers, and moves towards a broad market. In recent years, adhering to the integrated development strategy of “innovative technology + characteristic industry”, while doing a good job in the main engineering industry, the company tries to extend to the industrial field with high added value through the innovation driven strategy. The company focuses on the new chemical material technology monopolized by foreign countries and not industrialized in China, and actively creates the “source” of original technology in the chemical field. In the industrial development, the company comprehensively uses various incentive tools and introduces staff follow-up investment, which is conducive to comprehensively stimulate technological innovation and business vitality. At present, the green caprolactam technology independently developed by the company has built the world’s largest single line production capacity of 330000 tons / year. The company has successfully developed the technology of “butadiene direct hydrocyanidation” to produce adiponitrile, breaking the foreign monopoly on adiponitrile technology and filling the gap in China’s industry. Tianchen Qixiang is building a production capacity of 500000 tons / year in two phases, of which the first phase of the project with an annual output of 200000 tons of adiponitrile is expected to produce qualified adiponitrile products in April 2022. The new China aerogel project was successfully launched in February 27, 2022. At present, the first batch of silicon-based nano aerogel composite insulation felt products have been produced. Donghua Tianye phase I PBAT project with an annual output of 100000 tons has been successfully mechanically completed and has entered the stage of start-up and trial production as a whole. In January 2022, the company announced that it plans to invest in propylene oxide projects and phosphorus chemical projects, further build the carbon three industry chain and the “phosphate rock phosphoric acid high purity phosphoric acid iron phosphate phosphorus based high-end chemicals” industry chain, and expand the industrial territory. The company also focuses on a number of medium and high-end high value-added product technology fields, such as polyolefin elastomer (POE), environmental protection catalyst, PBAT, ASA resin, polyimide, flame retardant nylon, nylon 12, waste gasification, hydrogen energy storage and transportation, and orderly promotes the small-scale research and development, pilot scale expansion and industrial transformation of key technologies. In the future, the company will continue to extend the product chain, industrial chain and value chain of the industrial sector to a broader market.
Chemical engineering business: under the background of double carbon, the company actively grasps the new opportunities of capacity replacement in the chemical industry and the rapid development of new chemical materials and new energy materials, so as to consolidate its dominant position in the field of chemical engineering. The newly signed chemical engineering contracts of the company from 2018 to 2020 were 103 billion yuan, 186.3 billion yuan and 186.7 billion yuan respectively, ushering in rapid growth. Considering the gradual implementation and transformation of the above newly signed contract amount and a large number of new project opportunities brought by the dual carbon project, we conservatively predict that the company’s chemical engineering operating revenue will increase by 10% and 5% year-on-year in 2022 and 2023, respectively, and the corresponding operating revenue will be 99.7 billion yuan and 104.7 billion yuan respectively.
Infrastructure business: in recent years, the company has carried out diversified businesses in infrastructure fields such as industrial park, municipal administration, transportation and power engineering, innovatively operated large projects by using investment and financing modes such as equity investment, industry city integration and regional development, actively participated in leading park planning and construction, and moderately developed construction engineering businesses such as upgrading and transformation of traditional infrastructure, new infrastructure and new urbanization construction. The newly signed infrastructure contracts of the company from 2018 to 2020 were 28.1 billion yuan, 35.5 billion yuan and 56 billion yuan respectively, with a rapid growth rate. Considering the gradual implementation and transformation of the above newly signed contract amount, we conservatively predict that the company’s infrastructure operating revenue will increase by 10% and 5% year-on-year respectively in 2022 and 2023, and the corresponding operating revenue will be 19.5 billion yuan and 20.5 billion yuan respectively. Environmental treatment business: in recent years, the company has made full use of its own advantages to focus on the development of environmental treatment industry related to chemical engineering, focusing on the ecological restoration of cities along the Yangtze River and the Yellow River, the treatment of black and smelly water bodies, urban and rural domestic sewage treatment, industrial sewage and Park sewage treatment, solid and hazardous waste treatment and other projects, forming a large-scale effect and gradually occupying a larger market share. The newly signed Environmental Governance Contracts of the company from 2018 to 2020 were 5.2 billion yuan, 4.6 billion yuan and 8.4 billion yuan respectively, with a rapid growth rate. Considering the gradual implementation and transformation of the above newly signed contract amount, we conservatively predict that the company’s environmental governance operating revenue will increase by 20% year-on-year in 2022 and 2023, and the operating revenue will be 1.6 billion yuan and 2 billion yuan respectively.
Industrial business: the company adheres to the “innovation driven, industrial revitalization”, takes technology research and development as the “core”, drives the coordinated development of engineering and industry, focuses on the research and development of high-precision materials such as high-performance fibers, special synthetic rubber and engineering plastics, focuses on “neck” technology, expands the field of high value-added products in the new material industry, and creates the second growth curve. Benefiting from 200 thousand tons / year of adiponectin (first half of 2022), 100 thousand tons / year PBAT (first half of 2022 commissioning), 50 thousand party / year aerogel (2022 first quarter commissioning) and other new material projects completed and put into operation, we conservative forecast 2022, 2023 industrial business revenue were 11 billion 800 million yuan, 16 billion 500 million yuan. Since its listing, the company’s share price has experienced five sharp rises, which is the main driving force for the rise of share price
The reasons are as follows:
From December 2010 to November 2011, benefiting from the introduction of the 12th Five Year Plan for the development of modern coal chemical industry, the company’s performance increased significantly.
From December 2012 to September 2013: the newly signed contract amount hit a record high in the second half of 2012, and the big market broke out later.
One belt, one road, one belt, one road leading to the growth of overseas orders, was launched in August November 2014 -2015. The leader of the “three heads” model has a remarkable growth.
From 2017 to 2018, benefiting from the high prosperity of chemical business and the rapid growth of overseas and infrastructure business, the company’s performance rose.
From June 2021 to January 2022, the company raised 10 billion in non-public offering to transform the industry and lay out industrial fields such as new materials and new energy. In addition, the number of newly signed orders continued to grow, and the revenue exceeded expectations.
The company’s share price is affected by the newly signed orders, infrastructure needs and the progress of industrial projects related to the strong prosperity of the chemical industry.
In recent years, the company has benefited from the prosperity of the chemical industry, the demand for infrastructure has increased significantly, the amount of newly signed contracts has reached new highs, and the company’s performance is good. At present, the company’s PE and Pb are below the historical average level. With the deepening of the company’s industrial transformation, the company’s valuation is expected to improve in the future.
Profit forecast: as a leader in the field of chemical engineering, the company will enter the industry and open the second growth route. It is estimated that the net profit attributable to the parent company in 2021, 2022 and 2023 will be RMB 4.338 billion, 6.349 billion and 7.568 billion respectively, and the corresponding PE will be 12.60, 8.61 and 7.22 times respectively. It will be covered for the first time and given a “buy” rating.
Risk warning: market competition intensifies the risk; The downstream demand is lower than the expected risk; Production safety and environmental protection risks; The risk that the project construction progress is less than expected; The global epidemic control is less than the expected risk; Downstream demand is lower than expected; Adiponectin, aerogel, PBTA price fluctuation risk; Risk of failure of projects under research.
