\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 426 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) )
Event: the company released its annual report for 2021. The company achieved an operating revenue of 26.636 billion yuan, a net profit attributable to the parent company of 7.254 billion yuan and a net cash flow from operating activities of 4.906 billion yuan, with a year-on-year increase of 103.10%, 303.37% and 63.81% respectively.
The boom continues, and the annual report and quarterly report are submitted with perfect answers. In the fourth quarter, the company achieved a revenue of 8.401 billion yuan, a new high; Thanks to the rapid growth of revenue, the net profit of the company in each quarter increased by more than 220% year-on-year. Under the commodity boom environment, the gross profit margin and net profit margin of the company increased by 14.12/13.52pcts respectively year-on-year, and the profit margin improved significantly. During the period, the expense ratio remained low, with a year-on-year decrease of 1.64pcts. At the same time, the cash flow was in good condition, which could support the company’s high-intensity capital expenditure.
In terms of business, in 2021, the revenue of the company’s organic amine, fertilizer and acetic acid business increased by 142.44% / 23.65% / 143.19% respectively year-on-year. The new material business has become the main revenue growth point of the company. In 2021, the company’s refined adipic acid quality improvement project, caprolactam and supporting devices and dimethyl carbonate series technical transformation project were successfully put into operation, which expanded the development space for the company to move towards new materials and new energy track. The sales volume of the company’s organic fertilizer business and organic amine business increased by 33.63% year-on-year, and the sales volume of the company’s organic fertilizer business and new materials business increased by 33.63% year-on-year respectively in 2021.
Announcement of the first quarter profit expectation, the decline of coal brought a record high profit. In 2021, the average prices of urea, adipic acid, acetic acid, DMF and ethylene glycol increased by 41.9% / 55.2% / 97.9% / 77.0% / 45.5% respectively year-on-year, while the average prices of coal, benzene and propylene increased by 134.6% / 52.2% / 36.5% respectively year-on-year, which dragged down the performance of the company. In the first quarter of 2022, the company’s product prices remained stable on the whole, while the average prices of bituminous coal and thermal coal fell by 20.6% / 29.9% month on month respectively, laying the foundation for a new high profit in the first quarter.
With multiple project layouts, the revenue in 2024 is expected to double that in 2021. The company focuses on the direction of new materials and new energy. Jingzhou project, high-end solvent project, PA6 project, PA66 project and Jingzhou phase II BDO new material project all reach the post production stage, and the estimated revenue is 15.954 billion yuan. If the product price is based on the current price, the revenue may reach 35.786 billion yuan. Calculated according to the average 2-3-year construction and capacity climbing period, the company’s revenue in 2024 may double that in 2021.
The goal of equity incentive is clear, which shows the company’s confidence in long-term development. According to our calculation, based on the existing capacity, the target of 2022 / 2023 can be reached according to the operating rate of 90% and the quantile value of 45% of product price in five years. The 160% growth target in 2024 implicitly includes the income contributed by new projects, which is also in line with the 2-3-year construction cycle of new projects. Under this assessment mechanism, the annual revenue growth target of more than 40% year-on-year in 2024 shows the company’s confidence in long-term growth.
Profit forecast and Valuation: due to the change of product price, we adjusted the company’s profit expectation. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2023 will be 7.795/7.375 billion yuan (the previous value is 6.054/6.491 billion yuan), and the net profit attributable to the parent company in 2024 will be 10.485 billion yuan, corresponding to EPS of 3.69/3.49/4.96 yuan / share from 2022 to 2024, and the current price corresponding to P / E ratio of 8.78/9.28/6.52 times respectively. Maintain the “buy” rating.
Risk tip: the boom is down, and the product price is sharply callback; Production capacity construction progress is lower than expected; The first quarter is unaudited data, which shall be subject to the announcement of the first quarterly report; The calculation is subjective and only for reference
