\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Core view
The economic recovery promoted the substantial year-on-year growth of performance: the company released the annual performance express of 2021 in early March. Benefiting from the substantial recovery of the industrial cycle, the rise of prices and the construction and operation of the company’s new projects including adipic acid and DMF, the company achieved a revenue of 26.647 billion in 2021, a year-on-year increase of 103.18%; The net profit attributable to the parent company was 7.254 billion, a year-on-year increase of 303.45%. From the average price of 2021, the company’s main products urea, DMF, glacial acetic acid, adipic acid, octanol and ethylene glycol increased by 41.73%, 113.02%, 145.49%, 56.10%, 94.46% and 36.20% respectively year-on-year; Coal, propylene and pure benzene increased by 79.40%, 16.44% and 82.38% respectively year-on-year. Moreover, due to the tight supply and demand of traditional fossil energy and the impact of the dual control policy of energy consumption, the cost of raw materials including coal in 21q4 increased significantly, and the company’s gross profit margin in 21q4 decreased to 26.64% month on month. Recently, the company also announced the main operating data from January to February 2022. The revenue from January to February was about 5.3 billion, a year-on-year increase of about 75%; The net profit attributable to the parent company was about 1.6 billion, with a year-on-year increase of about 110%. Under the pressure of high raw materials, it still maintained a year-on-year high growth thanks to the continuous high prosperity of products and the launch of new products such as DMC and caprolactam.
The growth fog of coal chemical industry gradually dissipates, and the company’s new growth point continues to advance: our previous carbon neutralization series report research shows that coal chemical industry needs to produce hydrogen through changing processes due to the low hydrogen content of raw coal, which brings a large number of process emissions unrelated to energy consumption. It is a relatively more pressure-bearing path in the long term under the dual carbon goal. However, the grand narrative of carbon neutrality is not achieved overnight. Based on China’s coal based energy endowment, the industrial transformation needs to firmly grasp the security of raw material supply in its own hands. The general secretary of the ninth meeting of the Central Committee of Finance and economics pointed out that we should always implement the idea of “reducing pollution before safety” in the hands of the general secretary of the ninth meeting of the Central Committee of Finance and economics, and we should not deal with the problem of “reducing pollution before safety” in the first two meetings of the Central Committee of Finance and economics. We believe that, driven by the scientific implementation of carbon neutralization policy and the growth demand of the industry, the leader of advanced coal chemical industry represented by Hualu is still the group with the most vitality and the right to development. The company is also constantly promoting its upstream expansion and downstream extension. The gas making platform and ammonia alcohol project of Jingzhou second base have entered the stage of comprehensive construction; The high-end solvent, nylon 66 and PBAT projects of the Department have been approved and publicized by the national development and Reform Commission, and the green new material project of Jingzhou No. 2 base (including BDO, PBAT and NMP) is also publicized in the EIA.
Profit forecast and investment suggestions
Due to the expected purchase price of raw materials of RMB 2.782 billion and RMB 2.292 billion, the annual net profit ratio of the parent company is increased by 2.382 billion and RMB 2.204 billion respectively, which are expected to be 4.073 billion to 4.072 billion.
Risk tips
Risk of sharp fluctuations in the prices of products and raw materials; Risk that the investment and construction progress of new projects is less than expected
