\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 346 Hengli Petrochemical Co.Ltd(600346) )
Event: on April 6, 2022, Hengli Petrochemical Co.Ltd(600346) released the 2021 annual report. In 2021, the company achieved an operating revenue of 19.970 billion yuan, an increase of 29.92% year-on-year; The net profit attributable to the parent company was 15.531 billion yuan, a year-on-year increase of 15.37%; The basic earnings per share was 2.21 yuan, a year-on-year increase of 15.10%. Among them, the operating revenue in the fourth quarter of 2021 was 46.482 billion yuan, a year-on-year decrease of 5.16% and a month on month decrease of 0.87%; The net profit attributable to the parent company was 2.819 billion yuan, a year-on-year decrease of 20.95% and a month on month decrease of 30.73%. The net profit attributable to the parent company after deduction of non-profit was 2.506 billion yuan, a year-on-year decrease of 21.69% and a month on month decrease of 33.16%.
Comments:
The price of petrochemical products rose, and the annual profit increased steadily. In 2021, with the expansion of global covid-19 vaccination coverage, the relaxation of epidemic control measures in many countries and the implementation of large-scale fiscal stimulus and monetary easing policies, the world economic recovery promoted the rise of crude oil prices all the way. In 2021, the average annual price of Brent crude oil was US $71 / barrel, with a year-on-year increase of 63.8%. With strong cost side support and demand recovery, the price of petrochemical products rose and the price difference widened. In 2021, the average market prices of POY, FDY, DTY and PTA were 653907 yuan / ton, 669075 yuan / ton, 792411 yuan / ton and 416818 yuan / ton respectively, with a year-on-year increase of 31.69%, 26.51%, 24.93% and 30.29%. The average annual processing price difference of POY, FDY and DTY markets was 137383 yuan / ton, 152551 yuan / ton and 275887 yuan / ton respectively, with a year-on-year increase of 29.34%, 10.11% and 13.09% respectively. During the reporting period, the gross profit margin of the company’s polyester products was 18.92%, an increase of 2.57 percentage points year-on-year. The average selling prices of refining products, PTA and new material products of the company were 452701 yuan / ton, 422562 yuan / ton and 870456 yuan / ton respectively, with a year-on-year increase of 26.43%, 31.93% and 35.05% respectively. At present, the company has built and completed four capacity clusters of 20 million T / a refining and chemical integration project, 5 million T / a modern coal chemical plant, 1.5 million T / a ethylene project with the largest monomer in the world and 5 sets of PTA plants with the largest monomer in the industry, with a total of 11.6 million T / A. The production and sales volume of the company has expanded, the volume and price have risen together, and the revenue and profit of the company have increased significantly. However, in the fourth quarter of 2021, affected by factors such as lack of coal and power, slowing demand and rising raw material costs, the downward pressure on the industry increased, and the performance of the company decreased month on month in the fourth quarter.
Build the second growth curve based on the large chemical platform. At present, listed companies have built a processing capacity of 20 million tons of crude oil and 5 million tons of raw coal in the middle and upper reaches of the business sector. On the basis of “refining + ethylene + coal” as the industrial carrier, the company continues to extend to the downstream new material industry chain and high value-added products to strengthen the ability to cross the cycle. At present, the company’s projects under construction include: 1) 400000 tons of industrial silk devices in Suzhou plant and 900000 tons of civil silk devices in Nantong plant. 2) Jiangsu Xuanda (Hengke phase III) 1.5 million tons of green multifunctional textile new material project, including 150000 tons of new elastic fiber, 150000 tons of environmental protection fiber, 300000 tons of cationic POY, 300000 tons of full extinction POY and Shanghai Pudong Development Bank Co.Ltd(600000) tons of differentiated fiber (300000 tons / year POY, 300000 tons / year FDY). The new production capacity of 1.2 million tons of civil silk in Deli phase II and 1.4 million tons of industrial silk in Suzhou headquarters are also in the project planning stage. 3) Jiangsu Kanghui new materials has an annual output of 800000 tons of functional polyester film and functional plastics, including 470000 tons of high-end functional polyester film, 100000 tons of special functional film, 50000 tons of modified PBT and 80000 tons of modified PBAT. 4) The annual output of 450000 tons of PBS biodegradable plastics project of Kanghui Dalian New Material Technology Co., Ltd. mainly constructs the production capacity of 450000 tons of PBS / PBAT degradable new materials. 5) The lithium battery diaphragm project with an annual output of 1.6 billion square meters includes 12 wet lithium battery diaphragm production lines with an annual production capacity of 1.6 billion square meters. It is expected to be delivered for production in the middle of 2023. 6) The 5 million ton PTA project in Huizhou plant is expected to be completed and put into operation in the middle of 2022. 7) Hengli Petrochemical Co.Ltd(600346) (Dalian) Chemical Co., Ltd. new material supporting chemical project, including 350000 T / a synthetic ammonia unit, 300000 t / a nitric acid unit, 300000 t / a adipic acid unit and 200000 t / a food grade CO2 unit, as well as supporting general drawing and storage and transportation facilities. 8) 1.6 million T / a high-performance resin and new material project, 260000 T / a polycarbonate unit, 300000 t / a ABS unit, 450000 T / a ethylene oxide unit, 400000 t CO2 recovery and 200000 t / a ethanolamine and other 14 sets of chemical (combined) units. It is expected to be put into operation in the middle of 2023. 9) The high-performance polyester project with an annual output of 2.6 million tons, including three Shanghai Pudong Development Bank Co.Ltd(600000) T / a polyester production lines, two 300000 t / a polyester production lines and two 100000 t / a polyester production lines, is expected to be put into operation in the middle of 2023.
Launch employee stock ownership and stock repurchase to stabilize the market valuation of the company. In order to build a community of interests between employees and shareholders, reward the main core employees of the company participating in the 1.5 million ton / year ethylene project, 2.5 million ton / year pta-4 project and 2.5 million ton / year pta-5 project, and share the operating results of the rapid development of listed companies with enterprise employees, the company implemented the fifth employee stock ownership plan. In 2022, the company plans to launch the fourth phase of share repurchase plan with a scale of 1-1.5 billion yuan for the sixth phase of employee stock ownership plan. On the one hand, the launch and rapid implementation of the repurchase plan plays an important role in stabilizing the trend of the secondary market and avoiding the irrational decline of the company’s market value, and the market reputation effect is positive. On the other hand, ESOP helps to establish and improve the benefit sharing mechanism between workers and owners, realize the consistency of the interests of the company, shareholders and employees, and promote all parties to pay common attention to the long-term development of the company, so as to bring more efficient and lasting returns to shareholders.
The national double carbon policy is frequent to speed up the process of survival of the fittest in the refining and chemical industry. Recently, the CPC Central Committee and the State Council issued the opinions on completely, accurately and comprehensively implementing the new development concept and doing a good job in carbon peak and carbon neutralization, and the State Council issued the notice on printing and distributing the action plan for carbon peak before 2030 (GF [2021] No. 23), The national development and Reform Commission issued several opinions on strict energy efficiency constraints to promote energy conservation and carbon reduction in key areas and the action plan for strict energy efficiency constraints to promote energy conservation and carbon reduction in key petrochemical industries (20212025), so as to promote the carbon peak of the petrochemical industry and strictly control the new oil refining capacity. By 2025, China’s primary processing capacity will be controlled within 1 billion tons, and the capacity utilization rate of main products will be increased to more than 80%. We believe that under the environment of limited development on the supply side, Hengli Petrochemical Co.Ltd(600346) adopts the full hydrogenation process and relies on the refining and chemical integration device of “less oil and more”, optimizes the energy utilization rate, reduces the intensity of unit energy consumption, boosts the industrial chain to achieve low-carbon development, and further enhances its competitiveness in China’s refining and chemical industry.
Profit forecast and investment rating: we estimate that the net profit attributable to the parent company from 2022 to 2024 will be 15.6 billion yuan, 19.5 billion yuan and 23.7 billion yuan respectively, the growth rate of net profit attributable to the parent company will be 0.6%, 25.1% and 21.2% respectively, and the EPS (diluted) will be 2.22, 2.77 and 3.36 yuan / share respectively. Corresponding to the closing price on April 8, 2022, PE will be 10.28 times, 8.22 times and 6.78 times respectively. We are optimistic that the company’s large refining and chemical projects will continue to contribute revenue. Relying on the “large chemical” platform to develop the business of new chemical materials, we maintain the “buy” rating of the company.
Risk factors: the risk of short-term sharp fluctuations in crude oil prices; The risk that the recovery of terminal demand is less than expected; The risk of continuous dilution of profits due to the intensification of PTA production capacity in China; Risk of overcapacity in refining and chemical industry; The risk of slow profit recovery of downstream products; The “carbon neutrality” policy greatly increases the risk of the petrochemical industry.
