\u3000\u30 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 22 Hubei Yihua Chemical Industry Co.Ltd(000422) )
Core view
On April 8, 2022, Hubei Yihua Chemical Industry Co.Ltd(000422) issued the performance announcement for 2021. In 2021, the company realized an operating revenue of 18.544 billion yuan, a year-on-year increase of 34.33%; The net profit attributable to the parent company was 1.569 billion yuan, a year-on-year increase of 125501%. The rapid growth of the company’s performance is mainly due to the following three points:
1) the price of main products rose sharply and the gross profit margin increased. As of December 31, 2021, the Chinese market prices of the company’s main products urea, polyvinyl chloride (calcium carbide method) and diammonium phosphate increased by 39.9%, 13.5% and 46.6% respectively year-on-year. In 2021, the company sold 1.4844 million tons of urea; The sales volume of PVC is 801700 tons; The sales volume of diammonium phosphate was 1322100 tons, and the gross profit margin of the above products increased by 20.13pct, 9.89pct and 19.19pct respectively year-on-year.
2) peel off inefficient assets, focus on the main business and consolidate the business foundation. In 2021, on the one hand, the company optimized the industrial layout, accelerated the disposal of inefficient assets, and transferred 18.5% of the equity of Leibo Huarui Mining Co., Ltd. by means of public listing; Transfer the equity of Hunan Yihua to Yihua group; Xiangxi chemical applied for bankruptcy liquidation to reduce the operating burden of the company. On the other hand, the company’s Inner Mongolia Yihua PVC and caustic soda upgrading and expansion project and Qinghai Yihua calcium carbide furnace transformation project were successfully completed, increased production and efficiency, and consolidated the main business of chemical industry and chemical fertilizer.
3) layout fine chemicals and new energy tracks and open the future performance growth curve. In terms of fine chemicals, the project with an annual output of 20000 tons / year trimethylolpropane (TMP) and its supporting devices was completed and put into operation in the first half of the year, enhancing the company’s competitiveness in the field of polyols; The construction of new biodegradable materials (PBAT) with an annual output of 60000 tons / year has been rapidly promoted, and the market prospect is expected to be broad in the future; The TPO project with an annual output of 1000 tons / year with 34% equity participation of the company was put into operation as scheduled, and the green environmental protection material industry achieved a good start. In terms of new energy, in combination with its own phosphorus chemical business, actively join hands with the leading enterprises in the new energy industry chain, and jointly establish Yichang Bangpu Yihua new materials Co., Ltd. with Contemporary Amperex Technology Co.Limited(300750) subsidiary to build an integrated battery material supporting chemical raw material project. The total investment of the project was 32 billion yuan in Yichang on December 1, 2024.
In addition, the company also released the performance forecast for the first quarter of 2022. It is estimated that the net profit is about 580 million yuan ~ 650 million yuan, with a year-on-year increase of 173.17% ~ 206.14%. The company’s business situation is good, the production unit load level is high and operates stably, the main products maintain a high outlook, and the performance in 2022 is expected.
Investment advice
It is expected that the company’s EPS in 2022, 2023 and 2024 will be 3.08/4.16/4.53 yuan respectively, based on the closing price of 24.63 yuan on April 8, 2022, and the corresponding PE will be 8.01/5.92/5.44 times. Combined with the prosperity of the industry, we are optimistic about the development of the company and maintain the “strongly recommended” rating.
Risk tips
Upgrading of safety and environmental protection policies, rising prices of raw materials and electricity, changes in battery technology, etc.
