Satellite Chemistry ( Zhejiang Satellite Petrochemical Co.Ltd(002648) )
Matters:
The company released the performance forecast for the first quarter. It is expected that the net profit attributable to the parent company in 22q1 will be 1.5-1.75 billion yuan, with a year-on-year increase of 96-128%. The main reason for the significant increase in performance is that the wholly-owned subsidiary Jiangsu Lianyungang Port Co.Ltd(601008) Petrochemical Co., Ltd. has an annual output of 1.35 million tons of PE, 2.19 million tons of EOE and 260000 tons of ACN. In the first phase of the combined unit project, each unit has operated stably since it was put into operation on May 20, 2021, further improving the profitability of the company.
Guoxin chemical’s view:
1) as a leading enterprise in C2 industrial chain, the company has significant advantages in technical route
Firstly, compared with the petroleum and coal chemical routes, the ethane cracking process adopted by the company has many advantages over the traditional naphtha to ethylene technology, such as short process flow, small floor area, less unit investment, high ethylene yield and low production cost. Secondly, the by-product of light hydrocarbon route is mainly hydrogen, with the least carbon emission. In terms of investment and energy consumption, the investment and energy consumption of ethane cracking route are also relatively minimum. In addition, the downstream of the industrial chain extends the layout of high-end new materials, and plans electronic hydrogen peroxide and battery grade carbonate. The overall strength is expected to continue to improve.
2) the prosperity of the company’s traditional C3 industrial chain business has increased significantly in 121 years and is expected to maintain in the future
First of all, the company’s industrial chain is complete. The company has formed a very strong scale advantage in the C3 industrial chain. At present, the production capacity of acrylic acid and ester ranks first in China. It is one of the few companies in China that have complete upstream and downstream support. In 2021, the profit of C3 sector of the company increased significantly. In 2022, due to the sharp rise of propane price in the short term, the cost is under pressure in the short term. However, with the correction of oil price in the future, the relief of upstream cost pressure is expected to drive the repair of polypropylene profit, while the profit of downstream acrylic acid and ester business is expected to remain high due to the good supply and demand.
It is estimated that the company’s net profit attributable to the parent company in 22-24 years will reach 8 / 10.3/12.3 billion yuan, EPS will be 4.63/6.00/7.16 yuan / share, and the corresponding PE will be 9x / 7X / 6x. We choose a comprehensive chemical leader that is also integrated development in the industry and continuously expanding downstream to high-end chemicals for comparison. We believe that the current valuation level of satellite chemistry is underestimated, and the “buy” rating is given for the first time.
Risk tip: the progress of projects under construction does not meet expectations, product price fluctuations lead to declining profits, rising raw material costs, etc.
