\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Event: on March 28, the company released the announcement of pre increase of performance in the first quarter of 2022. It is expected that in the first quarter of 2022, the company’s net profit attributable to the parent company will reach 2.25 billion yuan to 2.45 billion yuan, with a year-on-year increase of 43% – 55% and a month on month increase of 37% – 49% (21q4 net profit attributable to the parent company comes from the performance express of the year 21).
Comments:
The prosperity of the industry is rising and new projects are put into operation, resulting in a significant increase in Q1 performance in 22 years: in Q1 of 2022, the prosperity of the coal chemical industry is rising, and the price of the company’s main products rises sharply year-on-year. According to Ifind data, in Q1 2022 (as of March 28), the average price of urea in Shandong was 2718 yuan / ton, up 31% year-on-year and 2% month on month; The average price of adipic acid in East China was 14198 yuan / ton, up 50% year-on-year and 7% month on month; The average ex factory price of DMF of the company was 17102 yuan / ton, with a year-on-year increase of 78% and a month on month decrease of 5%; The average ex factory price of glacial acetic acid of the company was 5352 yuan / ton, up 3% year-on-year and down 26% month on month. At the same time, DMC technical transformation project, caprolactam and supporting devices and other projects were successfully completed and put into operation in October 21, which expanded the company’s production capacity. The rise in the price of main products and the operation of new projects promoted the company’s Q1 performance in 2022 to increase significantly year-on-year. In addition, according to Ifind data, the average spot price of China Shipbuilding Industry Group Power Co.Ltd(600482) coal in Q1 (as of March 28) in 2022 was 977 yuan / ton, down 30% month on month. The company’s performance in Q1 in 22 years increased month on month, mainly benefiting from the decline of raw material prices and the production of new projects.
Adhering to cost reduction and cost control, the company’s profitability continues to improve: in the field of coal chemical gas, the company establishes the cost advantage of syngas through advanced technology and mature cogeneration capacity. The company’s annual output of 100000 tons of caprolactam, 200000 tons of nylon 6 and 350000 tons of ethylene glycol DMC project was put into operation in October 2021. Through advanced technology and self-supporting low-cost raw materials, the company has obtained low-cost advantages. Moreover, the company pays attention to cost control, and the three rates are significantly lower than the average level of comparable companies in the industry. The company insists on cost reduction and cost control, continuously improves the production process and reduces the production cost, and the profitability of the company is expected to continue to improve.
The construction of new energy and new materials projects was started, and the layout of new energy industrial chain was accelerated: on March 2, 2022, the company released a news that the company’s high-end solvent project and nylon 66 high-end new materials project were officially started. In the future, the company will further expand the new material industry chain through 120000 T / a PBAT degradable plastic and 80000 T / a nylon 66 high-end new material projects; Through the annual output of 300000 tons of DMC, 300000 tons of EMC and 50000 tons of Dec projects, enrich the matrix of new energy products, consolidate the advantages of battery solvent materials, further explore the new energy market and open up the growth space of the company.
Profit forecast, valuation and rating: according to the 21-year performance express released by the company, we lowered the company’s 21-year profit forecast and maintained the 22-23 year profit forecast. It is estimated that the company’s net profit for 21-23 years will be 72.54 (down 2%) / 8.124/8.871 billion yuan respectively, and the converted EPS will be 3.43/3.85/4.20 yuan / share respectively. We continue to be optimistic about Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) ‘s low-cost advantages and the transformation space of new materials and new energy, and maintain the “buy” rating.
Risk tip: the price of coal chemical products fluctuates sharply, the project construction progress is less than expected, and the demand of new materials and new energy industry is less than expected.
