\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 346 Hengli Petrochemical Co.Ltd(600346) )
Event:
The operating income of the parent company was 15.53 billion yuan, with a year-on-year increase of 15.51% in 2021. Among them, the company’s Q4 single quarter revenue was 46.48 billion, a year-on-year decrease of 5%, a month on month decrease of 1%, and the net profit attributable to the parent company was 2.8 billion yuan, a year-on-year decrease of 21% and a month on month decrease of 31%.
Comments:
In the past 21 years, the rise in the price of main products boosted the performance, and the downstream new chemical materials sector showed strong profitability: benefiting from the sharp rise in the price of crude oil in the past 21 years, the company’s “refining chemical fiber” industrial chain continued to rebound. In 2021, the average selling price of the company’s upstream refining and chemical products was 4527 yuan / ton, a year-on-year increase of + 26% over the previous 20 years; The average selling prices of PTA and downstream new material products were 4226 yuan / ton and 8705 yuan / ton respectively, with a year-on-year increase of + 32% and + 35% respectively. In 2021, the average prices of naphtha, PX, PTA and polyester FDY were US $646 / ton, US $841 / ton, RMB 4688 / ton and RMB 8360 / ton respectively, with a year-on-year increase of + 70%, + 50%, + 29% and + 23% respectively; The price differences of naphtha cracking, PX naphtha, PTA and polyester FDY were 273 US dollars / ton, 195 US dollars / ton, 588 yuan / ton and 2219 yuan / ton respectively, with a year-on-year increase of + 34 US dollars / ton, + 15 US dollars / ton, – 86 yuan / ton and + 202 yuan / ton respectively. In terms of gross profit margin, the gross profit margin of refining and chemical products, PTA and polyester products of the company in 2021 were 23%, 2% and 19% respectively, with a year-on-year increase of -1.5pct, – 8.8pct and + 2.6pct respectively. The company’s downstream functional films, biodegradable new materials and other products maintained a higher price difference and profitability, and the profitability of differentiated fiber varieties such as civil and industrial polyester yarn accelerated the repair, contributing to the steady growth of performance in the past 21 years.
The narrowing of upstream refining and chemical price difference and the decline of product sales have led to the decline of Q4 performance in 21 years: the price differences of naphtha cracking and PX naphtha in Q4 in 2021 were US $204 / ton and US $129 / ton respectively, and the chain comparison was US $80 / ton and US $97 / ton respectively. In the 21st year, the sales volume of refining and chemical products and PTA of Q4 company were – 37% and – 8% month on month respectively. The narrowing of the price difference of the upstream refining and chemical sector and the decline of sales volume reduced the company’s Q4 performance.
With sufficient reserves of projects under construction, the company has high growth: Hengli Petrochemical Co.Ltd(600346) (Huizhou) 5 million T / a PTA project is planned to be completed and put into operation in the second quarter of 2022. After the project reaches production and efficiency, it will achieve annual sales of more than 21.2 billion yuan and total annual profit of about 1.2 billion yuan; After the project with an annual output of 800000 tons of functional polyester film and functional plastics reaches production and efficiency, it is expected to realize an average annual total profit of about 2.9 billion yuan; Kanghui Plastic Co., Ltd. issued the policy of “450000 tons of biodegradable plastic materials per year”, which has a broad prospect for its subsidiary; The 1.5 million T / a green multifunctional textile new material project invested by Jiangsu Xuanda polymer materials Co., Ltd., a subsidiary company, will further enhance the comprehensive competitive strength of the whole polyester chemical fiber industry chain of the company; Market layout of degradable plastics of the supporting company for the construction of adipic acid project with an annual output of 300000 tons; On December 26, 2021, the equipment procurement signing ceremony of Hengli Petrochemical Co.Ltd(600346) wet diaphragm production line was held in Hengli (Suzhou) Industrial Park. The subsidiary Kanghui new materials will introduce 12 wet lithium battery diaphragm production lines from Japan Zhipu Machinery Co., Ltd. and Qingdao Zhongke Hualian new materials Co., Ltd., with an annual capacity of 1.6 billion square meters, marking Hengli Petrochemical Co.Ltd(600346) entering the field of lithium diaphragm and increasing the market of chemical new energy materials. The company will continue to contribute to performance increment after sufficient projects under construction are put into operation.
Relying on the large chemical platform of “refining + ethylene + coal” in the upstream, the synergy of the whole industrial chain mode is significant: the company has completed four capacity clusters in Dalian Changxing Island Petrochemical Industrial Park, including 20 million T / a refining and chemical integration project, 5 million T / a modern coal chemical plant, 1.5 million T / a global monomer largest ethylene project and 5 sets of PTA plants with a total of 11.6 million T / A. While continuing to strengthen the support of the upstream “big chemical” platform, the company accelerates the layout of high-end new materials in the downstream, making full use of the rich “chemical raw material warehouse” in the upstream of the company. At the same time, the output of raw material products integrated with “oil and coal” in the upstream will continue to enable high value-added products in the downstream.
The company plans to implement cash dividends and launch an employee stock ownership plan of nearly 10 billion to demonstrate development confidence: in order to share the company’s growth income with shareholders, the company plans to distribute cash dividends of 7.02 billion yuan in 2021, accounting for 45.2% of the net profit attributable to the parent company in 21 years. The total amount of the company’s sixth employee stock ownership plan reached 9.86 billion yuan, which effectively mobilized the enthusiasm and creativity of managers and employees and realized the consistency of the interests of the company, shareholders and employees.
Accelerate the transformation and layout of downstream new materials. At the current time point, it has the characteristics of “undervalued value + high growth”. Under the background of “carbon neutralization”, the company is currently in the stage of accelerating the extension to the downstream high value-added field. We believe that as the leader of private refining and chemical industry, the performance of its original business is expected to continue to shine. At the same time, the perfect layout of the downstream industrial chain will also bring observable performance increment and reduce performance volatility, and it will still have high growth in the future. From the perspective of valuation, as of April 6, 2022, the company’s 22-year dynamic PE was only 9 times, and the valuation was at the bottom of history. We believe that at the current time point, the company has the characteristics of “undervalued value + high growth” and has high investment value.
Profit forecast, valuation and rating: considering the rise of oil price and the increase of the company’s cost as a refining and chemical enterprise, we lowered the company’s profit forecast for 20222023 and added the profit forecast for 2024. It is estimated that the company’s net profit for 20222024 will be 166.77 (down 21%) / 181.6 (down 23%) / 20.7 billion yuan respectively, and the corresponding EPS will be 2.37/2.58/2.94 yuan / share respectively. The company continues to strengthen the basic support of the upstream “big chemical” platform and gradually improve the layout of the downstream new chemical materials sector. With significant advantages in the whole industrial chain and broad growth prospects, the company maintains the “buy” rating.
Risk tip: the progress of new production capacity is less than expected, the global economic recovery is less than expected, the international crude oil price fluctuates, and environmental protection policy risks.
