\u3000\u3 China Vanke Co.Ltd(000002) 637 Zanyu Technology Group Co.Ltd(002637) )
Matters:
On March 18, the Indonesian government issued a policy to cancel the China market obligation (DMO) policy, which previously required oil derivatives export enterprises to fulfill the obligation to sell edible palm oil at a fair price in China according to the export proportion of 30%. At the same time, the export tax and export surcharge levy ceiling of crude palm oil will be increased from 375 US dollars / ton to 675 US dollars / ton, and the policy will be implemented on March 21, 2022.
Guoxin chemical’s view:
1) the implementation of the new policies of the Indonesian government will greatly benefit the downstream industrial chain of palm oil in Indonesia: most tariffs under the new policies of Indonesia will be transformed into the cost advantage of local oil factories in Indonesia, further increasing the cost gap between local enterprises in Indonesia and overseas petrochemical enterprises. The company has a capacity of Shanghai Pudong Development Bank Co.Ltd(600000) tons / year, and the profit per ton is expected to expand to 15002000 yuan / ton.
2) the company is a global leading surfactant enterprise, with a production capacity of 80 / 110 / 1.3 million tons by the end of 20202022, accounting for nearly 40% of the market. Due to the supply side reform of the industry, the profitability is enhanced. At present, the profit per ton is restored to 400500 yuan. The company extends to the downstream daily chemical field OEM / ODM. The existing 100000 ton production capacity of Zhenjiang base is full. 500000 ton OEM bases are arranged in Hebi, Henan, Meishan, Sichuan and Cangzhou, Hebei. The production capacity is 10 / 60 / 1.6 million tons at the end of 2021 / 2022 / 2023 respectively. The expected profit of OEM liquid washing is 200300 yuan / ton. Combined with downstream Unilever, P & G, blue moon, white cat and other core customers, the daily chemical consumption attribute has increased steadily.
3) the company is the leader of China’s oil chemical industry, and its production capacity is second only to YIHAI KERRY, with a market share of about 35%. From 2021 to the end of 2023, the production capacity is 85 / 105 / 1.25 million tons, and will expand to the downstream high-end food grade oleic acid and ester in the future. Hangzhou Petrochemical 100000 t / a project under construction includes 20000 t / a OPO structural ester, 50000 T / a food grade monoglyceride and other high-end structural ester products, which are expected to be put into operation in the first half of 2022.
4) the company plans to use its own funds to repurchase shares for equity incentive: on November 23, 2021, the company issued the announcement on share repurchase plan, which plans to repurchase 171342 million yuan of company shares at a price of no more than 22.80 yuan / share for the implementation of equity incentive or employee stock ownership plan. According to the announcement on the progress of share repurchase issued by the company on March 16, 2022, a total of 9.95 million shares have been repurchased, with a total repurchase amount of 191 million yuan. The repurchase plan will continue to be implemented in the future to demonstrate the confidence of the company.
5) we kept the company’s 2021 profit forecast unchanged and raised the company’s performance from 2022 to 2023. It is estimated that the company’s performance from 2021 to 2023 will be RMB 815 / 1293 / 1586 million (original value: RMB 815 / 917 / 1057 million), and its EPS from 2021 to 2023 will be RMB 1.73/2.75/3.38 respectively (original value: RMB 1.73 / 1.95 / 2.25), corresponding to PE of 11.1/7.0/5.7x. The company is a leading enterprise in surfactant and oil chemical industry in China. Indonesia’s dukuda benefits from Indonesia’s new palm oil export policy, further expands its cost advantage and maintains the “buy” rating.
Comments:
The implementation of the new policies of the Indonesian government will greatly benefit the downstream industrial chain of palm oil in Indonesia
On February 8, 2022, the Ministry of Commerce of Indonesia issued the second amendment act on the ministerial regulation of the Ministry of Commerce on export policies and regulations No. 19 of 2021. From February 15, all exporters of crude palm oil and its derivatives are required to comply with the Chinese market obligation (DMO), forcing exporters to sell edible palm oil at parity in Indonesia and China according to 20% of the planned export volume (about 800 US dollars / ton of bulk edible oil), To ensure the safety of edible oil for Indonesian residents. On March 9, 2022, the Ministry of Commerce of Indonesia issued Decree No. 170 of 2022 on determining China’s market obligations and China’s sales price. From March 10, the proportion of compulsory sales of palm oil in China has increased from 20% to 30% of the company’s planned export volume.
On March 18, the Indonesian government issued a policy to cancel the China market obligation (DMO) policy, which previously required oil derivatives export enterprises to fulfill the obligation to sell edible palm oil at a fair price in China according to the export proportion of 30%. At the same time, the export tax and export surcharge levy ceiling of crude palm oil will be increased from 375 US dollars / ton to 675 US dollars / ton, and the policy will be implemented on March 21, 2022.
The implementation of the new policy of the Indonesian government will greatly benefit the downstream industrial chain of palm oil in Indonesia: most tariffs of the new policy of Indonesia will be transformed into the cost advantage of local oil factories in Indonesia, further increasing the cost gap between local enterprises in Indonesia and overseas oil and chemical enterprises. The company has a capacity of Shanghai Pudong Development Bank Co.Ltd(600000) tons / year, and the profit per ton is expected to expand to 15002000 yuan / ton.
The company is a global leading surfactant enterprise, laying out liquid washing OEM and extending the industrial chain to daily chemical consumer goods
By the end of 20202022, the company’s surfactant production capacity is 80 / 1.1 / 1.3 million tons, with a market share of nearly 40%. Due to the supply side reform of the industry, the profitability is enhanced. At present, the profit per ton is restored to 400500 yuan. The company extends to the downstream daily chemical field OEM / ODM. The existing 100000 ton production capacity of Zhenjiang base is full. 500000 ton OEM bases are arranged in Hebi, Henan, Meishan, Sichuan and Cangzhou, Hebei. The production capacity is 10 / 60 / 1.6 million tons at the end of 2021 / 2022 / 2023 respectively. The expected profit of OEM liquid washing is 200300 yuan / ton. Combined with downstream Unilever, P & G, blue moon, white cat and other core customers, the daily chemical consumption attribute has increased steadily.
The company is the leader of China’s oil and chemical industry, and China’s downstream layout of high gross profit products
The company’s production capacity is second only to YIHAI KERRY, with a market share of about 35%. From 2021 to the end of 2023, the production capacity is 85 / 105 / 1.25 million tons. In the future, it will expand to the downstream high-end food grade oleic acid and ester. Hangzhou Petrochemical 100000 t / a project under construction includes 20000 t / a OPO structural ester, 50000 T / a food grade monoglyceride and other high-end structural ester products, which are expected to be put into operation in the first half of 2022.
The company plans to use its own funds to repurchase shares for equity incentive
On November 23, 2021, the company issued the announcement on share repurchase plan, which plans to repurchase 171342 million yuan of the company’s shares at a repurchase price of no more than 22.80 yuan / share for the implementation of equity incentive or employee stock ownership plan. According to the announcement on the progress of share repurchase issued by the company on March 16, 2022, a total of 9.95 million shares have been repurchased, with a total repurchase amount of 191 million yuan. The repurchase plan will continue to be implemented in the future to demonstrate the confidence of the company.
Investment suggestion: raise the company’s profit forecast for 20222023 and maintain the “buy” rating
We kept the company’s 2021 profit forecast unchanged and raised the company’s performance from 2022 to 2023. It is estimated that the company’s performance from 2021 to 2023 will be RMB 815 / 1293 / 1586 million (original value: RMB 815 / 917 / 1057 million), and its EPS from 2021 to 2023 will be RMB 1.73/2.75/3.38 respectively (original value: RMB 1.73 / 1.95 / 2.25), corresponding to PE of 11.1/7.0/5.7x. The company is a leading enterprise in surfactant and oil chemical industry in China. Indonesia’s dukuda benefits from Indonesia’s new palm oil export policy, further expands its cost advantage and maintains the “buy” rating.
Risk tips
Palm oil prices fell sharply, downstream demand was lower than expected, Indonesia’s export policy risk, and the commissioning progress of new projects was lower than expected.
