Satellite Chemistry ( Zhejiang Satellite Petrochemical Co.Ltd(002648) )
Event: on March 21, 2022, the company released its annual report for 2021, which achieved a revenue of 28.56 billion yuan in 2021, a year-on-year increase of + 165.1%; The net profit attributable to the parent company was 6.01 billion yuan, a year-on-year increase of + 261.6%; The net profit deducted from non parent company was 5.85 billion yuan, a year-on-year increase of + 269.1%.
Jiangsu Lianyungang Port Co.Ltd(601008) C2 phase I project was successfully put into operation, which promoted the high growth of the company’s performance. In May 2021, all units of phase I of Jiangsu Lianyungang Port Co.Ltd(601008) Petrochemical C2 project of the subsidiary company were put into operation successively, gradually contributing to the performance increment and promoting the high growth of the company’s performance; Among them, the company’s business revenue of functional chemicals, new polymer materials and new energy materials increased by 281.7% / 218.4% / 1.0% respectively. In terms of gross profit margin, the gross profit margin of the company’s functional chemicals, polymer new materials and new energy materials business in 2021 was 37.6% / 33.2% / 47.3% respectively, with an increase of 6.0% / 5.2% / 6.7% respectively, mainly due to the expansion of price difference driven by the rise of product prices; In terms of cash flow, the company realized a net operating cash flow of 3.67 billion yuan in 2021, an increase of 4.19 billion yuan year-on-year, an increase of 806.1%, mainly due to the increase of net profit. Looking forward to 2022, we believe that with the full production and sales of Jiangsu Lianyungang Port Co.Ltd(601008) C2 phase I project and the ramp up of phase II project in 2022, the profitability of the company is expected to continue to improve.
New production capacity has been put into operation, and the growth expectation has been gradually fulfilled. At present, the company has sufficient projects under construction and will be put into operation in the next few years, which is expected to gradually realize the company’s growth. (1) Jiangsu Lianyungang Port Co.Ltd(601008) petrochemical project phase II includes 400000 T / a high-density polyethylene, 730000 T / a ethylene oxide and Shanghai Pudong Development Bank Co.Ltd(600000) T / a styrene. At present, the installation of main equipment has been completed, and it is expected to conduct pilot production in 2022 and ramp up production capacity; (2) The first phase of the green new material industrial park project includes 100000 t / a ethanolamine, 400000 T / a polystyrene, 150000 T / a battery grade carbonate and other devices. At present, the construction has been started, and the trial production is planned to be completed successively in the third quarter and the fourth quarter of 2022. The project is one of the important product series of the company’s three business segments of functional chemicals, new energy and new materials. (3) The new energy and new material integration project of Pinghu base is expected to be completed by the end of 2023.
The transformation path is clear and is committed to building a low-carbon chemical new material technology company. After years of development, under the guidance of the “double carbon” goal, the company has formed a clear transformation and development path, which is to adhere to the light raw materials as the core, form three business segments of functional chemicals, new energy and new materials, and build a low-carbon chemical new materials technology company. Among them, relying on C2 and C3 industrial chain platforms, the company plans to lay out new chemical materials around the new energy industry, and plans to build battery grade vinyl carbonate (EC), dimethyl carbonate (DMC), diethyl carbonate (DEC), methyl ethyl carbonate (EMC) and other devices by the addition reaction of ethylene oxide and carbon dioxide in 2022. At the same time, the company uses a large number of by-product green hydrogen and hydrogen peroxide, which accounts for more than 50% of the market share of photovoltaic industry in Jiangsu and Zhejiang, so as to further expand the influence of hydrogen peroxide in semiconductor, photovoltaic and other industries.
Investment suggestion: according to the production progress of the company’s C2 project, we raised the net profit attributable to the parent company from 2022 to 2024 to 9.1/11/11.8 billion yuan, corresponding to 8 / 7 / 6 times of the closing price on March 21, 2022. Considering the performance growth brought by the continuous production of C2 project, we maintained the “recommended” rating.
Risk warning: the risk of price decline of main products Jiangsu Lianyungang Port Co.Ltd(601008) project may slow down.
