\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Key investment points
Event: the company released the annual report of 2021, and achieved a revenue of 26.64 billion yuan, a year-on-year increase of + 103%, and a net profit attributable to the parent company of 7.25 billion yuan, a year-on-year increase of + 303%; In the fourth quarter of 2021, the company achieved a revenue of 8.4 billion yuan, a year-on-year increase of + 106%, a month on month increase of + 26%, and a net profit attributable to the parent company of 1.64 billion yuan, a year-on-year increase of + 223%, a month on month increase of – 9%. At the same time, the company issued an announcement on the pre increase of performance in the first quarter of 2022. It is expected that the net profit attributable to the parent company will reach RMB 2.25-2.45 billion in 2022q1, with a year-on-year increase of + 43% to + 55% and a month-on-month increase of + 37% to + 49%.
The rise of the industry boom was superimposed on the release of new production capacity, and the company’s profit reached a record high. In 2021, driven by the recovery of downstream demand and the rise of international energy prices, the prosperity of chemical products market rose. According to the data of Zhuo Chuang information, the average prices of urea, DMF, acetic acid, adipic acid, ethylene glycol, n-butanol and octanol in 2021 increased by 35.9%, 104.7%, 148.5%, 58.0%, 36.9%, 100.5% and 94.3% respectively year-on-year. The company accurately grasped the market trend, strengthened system optimization and production control, and realized the prosperity of production and marketing. At the same time, 166600 tons of refined adipic acid, 300000 tons of caprolactam and 300000 tons of DMC projects were put into operation on schedule within the year, contributing to the performance increment, and the company’s annual profit hit a record high.
The boom of main products was maintained, and the pressure on raw materials was relieved. In the first quarter of 2022, the average prices of urea, DMF, acetic acid, adipic acid, ethylene glycol, n-butanol and octanol changed by + 6.7%, + 2.5%, – 27.6%, + 5.7%, – 5.8%, – 0.1% and + 1.0% respectively month on month. The product boom remained high, the power coal of raw materials decreased by 20.3% month on month, and the pressure on raw materials of the company was relieved. Recently, the national development and Reform Commission issued a notice on further improving the price formation mechanism of the coal market, giving guidance on the mining price of coal from major producing areas, which is conducive to guiding the coal price to operate within a reasonable range, and enhancing the stability of the company’s profit in 2022.
New projects blossom at multiple points, and Jingzhou base opens up growth space. According to the strategic positioning of “local high-end, seeking new chapter in different places”, the company has arranged high-end solvent projects (including DMC 300000 t / A, Dec 300000 t / A and EMC 50000 T / a), 80000 t nylon 66 high-end new material projects and 120000 t PBAT projects in Dezhou base, and opened a second base in Jingzhou. The first phase of the project has been started in November 2021 and is expected to be completed and put into operation by the end of 2023.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 3.88 yuan, 4.22 yuan and 4.51 yuan respectively. In view of the huge technical advantages of the company’s coal chemical industry, the industrial chain will be fully extended and the downstream high value-added products will be distributed. The second base will be located in Jingzhou to replicate the low-cost advantages and maintain the “buy” rating.
Risk warning: the commissioning progress of the new project is less than expected, and the price of raw materials may fluctuate sharply
