\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Event 1: the company released its annual report for 2021. In 2021, the company achieved a revenue of 26.636 billion yuan, a year-on-year increase of + 103.10%, and a net profit attributable to the parent company of 7.254 billion yuan, a year-on-year increase of + 303.37%. The company plans to distribute a cash dividend of 8.00 yuan (including tax) for every 10 shares, and is expected to distribute a cash dividend of 1.698 billion yuan, accounting for 23.41% of the company’s net profit attributable to the parent company in 2021. At the same time, the company expects to achieve sales revenue of about 30 billion yuan in 2022, a year-on-year increase of 12.63%, and the annual performance is in line with market expectations. Event 2: the company announced the pre increase announcement of performance in the first quarter of 2022. It is expected that the net profit attributable to the parent company will reach 2.25 billion yuan to 2.45 billion yuan in the first quarter of 2022, with a year-on-year increase of 43% to 55%. The performance in the first quarter slightly exceeded the market expectation.
The price of main products rose sharply year-on-year, and the company’s annual performance increased significantly. The gross profit margin of the company’s sales in 2021 was 35.49%, a year-on-year increase of 14.12 percentage points, and the net profit margin was 27.23%, a year-on-year increase of 13.52 percentage points, mainly due to the sharp rise in the prices of the company’s main products such as urea, acetic acid and DMF. Operating cash flow was 4.906 billion yuan, a year-on-year increase of + 63.81%, and receivables financing was 3.786 billion yuan, a year-on-year increase of + 762.04%, mainly due to the increase of bank acceptance bills received; The inventory was 1.038 billion, a year-on-year increase of + 279.83%, mainly due to the increase in the stock of bulk raw materials and the increase in the unit cost of inventory at the end of the period;
The quality of adipic acid and projects under construction increased by -6.4 billion yuan year-on-year, mainly due to the conversion of adipic acid to -3.9 billion yuan; In the first quarter of 2022, the company’s urea, adipic acid and other products increased significantly year-on-year, and the cost side power coal price decreased by about 20% month on month. At the same time, a series of technical transformation projects for increasing production and quality of dimethyl carbonate, caprolactam and supporting devices were completed and put into operation, and the company’s performance in the first quarter of 2022 increased significantly. Jingzhou base built the second Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , and the adjustment of energy consumption dual control policy opened the ceiling of medium and long-term growth.
The company focuses on building the second production base in Jingzhou. The first phase of the project has a total investment of 11.528 billion yuan. At present, it has entered the comprehensive construction stage and is expected to be put into operation by the end of 2023. The adjustment of the dual control policy of energy consumption and the fact that the energy consumption of raw materials is not included in the total energy consumption control have greatly alleviated the pressure on the company’s carbon emission and made it high-quality in the future
The approval threshold for new capacity of the project is expected to decline, opening the ceiling of the company’s medium and long-term growth.
Layout new materials and extend the industrial chain to high value-added products. Relying on the cost advantages accumulated in the field of traditional coal chemical industry, the company continues to extend vertically along the industrial chain, develops in the field of new materials with faster downstream demand growth, higher added value and broader market space, and copies the advantages of industrial chain integration and scale of the company to the field of new materials, so as to further optimize the product structure of the company and enhance the profitability of the company. At present, the new material direction of the company includes 200000 tons of nylon 6 chips, 80000 tons of nylon 66 high-end new material project, PBAT degradable plastic project, DMC, EMC and other high-end solvent projects. The centralized operation of the project in the next two or three years will significantly increase the company’s performance.
Profit forecast and investment suggestions: we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 27677 / 32210 / 41.601 billion respectively; The net profit attributable to the parent company was 7.094/83.62/10.152 billion yuan respectively, and the EPS was 3.36, 3.96 and 4.81 yuan / share. The PE valuation corresponding to the current stock price was 9.8/8.3/6.9 times respectively, maintaining the “buy” rating.
Risk tips: the price of chemical products has fallen sharply, the production progress of new projects is less than expected, the price of raw materials fluctuates sharply, and there are risks in production safety.
