\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 069 Shandong Kaisheng New Materials Co.Ltd(301069) )
Key investment points
Deep cultivation of thionyl chloride and downstream applications to build a three-dimensional industrial chain: the company started with the production of fine chemical intermediate thionyl chloride, and then gradually developed various downstream products synthesized with thionyl chloride as raw materials, including aramid polymerization monomer M / p-benzoyl chloride, p-nitrobenzoyl chloride and Chloroether, which further extended to the downstream polymer material polyether ketone ketone (PEKK), so as to form a three-dimensional industrial chain structure. The industry standards of sulfoxide chloride, M / p-benzoyl chloride and other products are prepared by the company, which is in a leading position in the industry. The annualized compound growth rate of the company’s net profit attributable to the parent company from 2017 to 2021 was 25.4%, and the gross profit margin basically remained above 35%.
The demand for new electrolytes is expected to exceed expectations. The subdivision of sulfoxide chloride, the raw material of Kaisheng card position: compared with lithium hexafluorophosphate (LiPF6), the new lithium electrolyte lithium difluorosulfimide (lifsi) has better thermal stability, chemical stability and higher conductivity, but its high price (about 400000 yuan / ton) restricts its large-scale application and is only used as an additive. However, in the last year, the price of LiPF6 soared from 110000 yuan / ton to about 500000 yuan / ton, which promoted the development of its substitute lifsi. Many well-known electrolyte enterprises in China expanded the production of lifsi dozens of times. Sulfoxide chloride is the raw material for synthesizing lifsi. We predict that by 2025, the demand for sulfoxide chloride for synthesizing lifsi will reach 114000 tons, with an annual compound growth rate of more than 100%. In addition to the application in lithium battery field, the application of sulfoxide chloride in artificial sweetener sucralose is another growth point, and the demand growth rate in the next five years will be 10% – 15%. As the world’s largest producer of sulfoxide chloride (with a capacity of 150000 tons / year in 2021), Kaisheng has scale effect. In addition, through the optimization of the company’s distillation process, reduce energy consumption and environmental protection. It is expected to fully benefit from the large-scale application of sulfoxide chloride in lifsi and sucralose.
The company is the leader of aramid polymerization monomer M / p-benzoyl chloride, and supplies well-known customers at home and abroad: aramid is divided into meta aramid and para aramid according to whether the molecular chain has branched chain structure. Meta aramid is often used in the fields of protective clothing, industrial filter materials, insulation and honeycomb core materials because of its high temperature resistance, insulation and high strength. The self-sufficiency rate of meta aramid in China is about 70%; Para aramid fiber has better mechanical properties and is often used in bulletproof, friction sealing, optical fiber reinforcement and other fields. The self-sufficiency rate of para aramid fiber in China is low, only 25%. We predict that in the next five years, the annual compound growth rate of global demand for para aramid fiber will be about 13%, and the growth rate of para aramid fiber will be about 10%. Benefiting from the growth of aramid demand, it is estimated that the annualized compound growth rate of aramid polymerization monomer / p-benzoyl chloride demand is about 11%. M / p-benzoyl chloride has a high concentration of production capacity, and Kaisheng is the leading enterprise of M / p-benzoyl chloride (with a production capacity of 21000 tons / year in 2021). The self supplied raw material sulfoxide chloride can save about 1185 yuan per ton of M / p-benzoyl chloride. Inter company / p-benzoyl chloride products have successfully entered the supply chain of DuPont, the global leader of aramid fiber. In addition, the company also cooperates with other well-known aramid production enterprises at home and abroad. Benefiting from the trend of gradual localization and substitution of aramid fiber in China and the expectation of recovery after the overseas aramid fiber demand epidemic, the company is expected to have good demand for aramid monomer in the future.
Develop the downstream application of PEKK with high added value and create an improved synthesis method to greatly reduce the production cost: PEKK is a kind of Paek (polyarylether ketone), which belongs to special engineering plastics. Compared with general plastics and engineering plastics, PEKK has high added value and is often combined with 3D printing technology and used in the medical field; It can be used in aerospace and other fields. PEKK has high technical barriers. Only Kaisheng in China has complete technology and can realize large-scale production. The company’s IPO design PEKK production capacity is 2000 tons / year, and it is expected to reach 1000 tons in the first half of 2022. The company created an improved Lewis acid / Lewis base CO catalytic method to synthesize PEKK. The purity of the product is comparable to DuPont two-step method, but the production cost is greatly reduced. In addition, since the raw material M / p-benzoyl chloride for synthesizing PEKK is provided by the company, the cost of producing a single ton of PEKK can be saved by about 5000 yuan.
There are many products in the chlorine and sulfur industry chain, with many long-term and short-term performance growth points: p-nitrobenzoyl chloride and Chloroether are also the downstream extension products of the company’s Chlorinated sulfoxide. The production process of p-nitrobenzoyl chloride and aramid polymerization monomer M / p-benzoyl chloride is similar and can be replaced by each other. The cost of this product has a strong ability to transfer to the downstream. In addition, the company will also distribute other high value-added products in the chlorine and sulfur industrial chain. The company has many long-term and short-term performance growth points. In the short term, there is room for further improvement in the capacity utilization of sulfoxide chloride and M / p-benzoyl chloride. In addition, the 10000 t / a new capacity of M / p-benzoyl chloride phase II will be gradually released, and the gradual operation of the 2000 t / a polyether ketone project will become the growth point of the company’s performance. In the long run, Weifang Shandong Kaisheng New Materials Co.Ltd(301069) Materials Co., Ltd., a subsidiary, will build a 10000 t / a high-performance poly (aryl ether ketone) new material integrated industrial chain project in the future. The final products are 5000 t / a peek and 5000 t / a peek, and many raw materials and intermediates are constructed in this integrated project. This project will become the long-term growth point of the company’s performance.
Investment suggestion: we predict that the net profit attributable to the parent company from 2022 to 2024 will be 290 million yuan, 480 million yuan and 650 million yuan respectively, with a year-on-year increase of 50.9%, 63.4% and 35.7% respectively, which is equivalent to a P / E ratio of 32 times in 2023. It is covered for the first time and given an investment rating of “buy-b”.
Risk tips: the penetration rate of lithium difluorosulfimide is lower than expected, the expansion and sales of polyether ketone and other products are lower than expected, and the price of raw materials rises sharply.
