\u3000\u30 Beijing Jingyeda Technology Co.Ltd(003005) 96 Rianlon Corporation(300596) )
Event: on March 31, the company received the reply on approving Rianlon Corporation(300596) to issue shares to Han Qian and others to purchase assets and raise matching funds for registration issued by China Securities Regulatory Commission. The company plans to purchase 922109% equity of Jinzhou Kangtai lubricating oil additives Co., Ltd. (hereinafter referred to as “Kangtai shares”) by issuing shares and paying cash.
Comments:
The acquisition of Kangtai shares was approved and officially entered the lubricating oil additive market
In December 2020, the company began to promote the acquisition of Kangtai, one of the leaders in China’s lubricating oil additive industry. It is proposed to purchase 2109.9% of the shares of Jinzhou Kangtai Co., Ltd. in the field of lubricants and additives in cash. The pricing of the underlying assets of the transaction is 595844300 yuan, of which 30% is paid in cash and 70% is paid in the shares of listed companies. It is expected to issue 14872200 shares, which is about 28.05 yuan, about 39% lower than the share price of 45.84 yuan on March 31. The performance commitment corresponding to this transaction is that the average net profit of the target company from 2021 to 2023 is 56.5 million yuan. In 2021, Kangtai achieved a revenue of 526 million yuan, an increase of 18.3% year-on-year; The net profit was 44.5 million yuan, a year-on-year increase of 33.5%.
In October and December 2021, Shenzhen Stock Exchange suspended the review of asset restructuring due to the failure of energy-saving approval of Kangtai’s new “lubricating oil additive project with an annual output of 50000 tons” and the expiration of relevant financial data. At the end of February 2022, the latest financial and evaluation data of Kangtai Co., Ltd. has been re compiled, and its “50000 tons of lubricating oil additives construction project” has also submitted the relevant application documents for energy conservation approval to the corresponding authorities. Finally, the company’s acquisition of Kangtai shares was finally approved by the CSRC on March 31, 2022. After the completion of asset delivery, the company will officially enter the lubricating oil additive market with a global market scale of 100 billion yuan.
The market scale of lubricating oil additives has reached 100 billion yuan, and the international and Chinese markets have grown steadily
Since the 1930s, the global lubricant additive industry has gradually developed to a relatively mature stage, with a large market scale and stable growth. Since 2017, the global demand for lubricating oil additives has entered a stable fluctuation stage, and the market scale tends to be stable. In 2020, under the impact of covid-19 epidemic, the global demand for lubricating oil additives decreased to 4.35 million tons, and the market scale decreased to 14.4 billion US dollars. Considering the rapid recovery of the global economy after the epidemic and the rapid development of high-end manufacturing industry, the annual demand and market scale of lubricating oil additives may show a stable growth trend in the future. At the same time, with the shift of the global lubricant market focus to the Asia Pacific region, the actual consumption of lubricant additives is also expected to enter a new round of growth cycle. According to the prediction of the article “market analysis of lubricating oil additives outside China” (written by an Junxin), the global consumption of lubricating oil additives will increase to 5.7 million tons in 2025, and the corresponding market scale will reach 19.5 billion US dollars. The consumption corresponds to about 5.6% of CAGR in 20202025, and the market scale corresponds to about 6.3% of CAGR in 20202025.
In China, the apparent consumption of lubricating oil additives in China has also increased year by year in recent years. According to Zhiyan consulting data, the apparent consumption of lubricating oil additives in China from 2013 to 2019 was 3.8%, and the apparent demand decreased slightly by 1.1% in 2020 due to the impact of the epidemic. In terms of the total output of lubricating oil additives, China also shows an increasing trend year by year. From 2013 to 2020, the total output of lubricating oil additives in China increased from 485000 tons to 710000 tons, and the CAGR in 20132020 was 5.6%. In terms of import and export, the statistics of the General Administration of Customs of China show that the import volume of lubricating oil additives in China fluctuated slightly from 2013 to 2020, but it was generally stable at about 300000 tons. The export volume increased rapidly, from 25000 tons in 2013 to 106000 tons in 2020. The export volume of lubricating oil additives CAGR from 2013 to 2020 was 22.9%
Rianlon Corporation(300596) joining the company and optimizing its own capacity structure, the capacity utilization rate of Kangtai Co., Ltd. is expected to be significantly improved
By the end of 2021, Kangtai has a total capacity of 93000 tons / year of lubricating oil additives, including 8000 tons / year of high-grade lubricating oil and grease additives, 5000 tons / year of sulfonate detergent, 10000 tons / year of alkylbenzene sulfonic acid, 10000 tons / year of ZDDP, and 30000 tons / year of ashless dispersant and compound agent. However, due to the problems of its own capacity structure and the introduction of downstream customers, the output of lubricant additives of Kangtai Co., Ltd. in 2021 was only 34537 tons, and the corresponding capacity utilization rate was only 37.1%. Among them, alkylbenzene sulfonic acid is the upstream raw material of sulfonate cleaner, and the corresponding consumption ratio is about alkylbenzene sulfonic acid: sulfonate = 1:3. However, due to the low production capacity of sulfonate cleaners in Kangtai Co., Ltd., it is unable to consume a large amount of alkylbenzene sulfonic acid raw materials, so the production capacity utilization rate of alkylbenzene sulfonic acid products is less than 20%. In addition, in terms of composite agent and ashless dispersant, due to the long lead-in cycle of composite agent and high lead-in difficulty, Kangtai Co., Ltd. is still in a low position in the capacity utilization of composite agent. Ashless dispersant is one of the main components of internal combustion engine oil compound, and its capacity utilization rate is also limited due to the low capacity utilization rate of compound agent in Kangtai Co., Ltd.
We believe that with the completion of the new 30000 T / a sulfonate cleaner capacity of Kangtai shares, the alkylbenzene sulfonic acid capacity of Kangtai shares will also be significantly increased. In terms of compounding agents, Rianlon Corporation(300596) after taking the lead, with its strong global sales network and customer resources, is expected to accelerate the introduction process of Kangtai’s compounding agents, so as to promote the production capacity of Kangtai’s compounding agents and ashless dispersants.
Profit forecast, valuation and rating: the company’s acquisition of Kangtai shares has been officially approved and plans to officially enter the 100 billion level lubricating oil additive market. As the asset delivery of Kangtai shares has not been completed yet, we temporarily ignore the performance increment brought by the company’s acquisition of Kangtai shares and maintain the company’s profit forecast. It is estimated that the net profit attributable to the parent company during 20222024 will be 526 million yuan, 676 million yuan and 784 million yuan respectively, maintaining the “buy” rating of the company.
Risk tip: asset delivery risk, capacity construction risk, raw material price fluctuation, and downstream demand is less than expected.
