\u3000\u300 Fawer Automotive Parts Limited Company(000030) 1 Jiangsu Eastern Shenghong Co.Ltd(000301) )
Event: on April 18, 2022, Jiangsu Eastern Shenghong Co.Ltd(000301) released the annual report of 2021: the operating revenue reached 51.722 billion yuan, a year-on-year increase of 53.48% (after adjustment); The net profit attributable to the shareholders of the listed company was 4.544 billion yuan, a year-on-year increase of 492.66% (after adjustment); The weighted average return on net assets was 17.11%, with a year-on-year increase of 13.70 percentage points (after adjustment). The gross profit margin of sales was 16.72%, with a year-on-year increase of 10.77 percentage points; The net profit margin on sales was 9.83%, up 8.46 percentage points year-on-year.
Among them, Q4 achieved a revenue of RMB 12.448 billion in 2021, with a chain comparison of – 11.50% (after adjustment); The net profit attributable to the parent company was 628 million yuan, with a month on month ratio of – 38.70% (after adjustment).
Comments:
The profitability of filament was enhanced, and the injection of silbang improved the overall performance
In 2021, the company’s performance ushered in rapid growth, with a revenue of 51.722 billion yuan, a year-on-year increase of 53.48% (after adjustment); The net profit attributable to the parent company was 4.544 billion yuan, with a year-on-year increase of 492.66% (after adjustment). Compared with before the adjustment, the net profit attributable to the parent company in 2021 increased by 133645% year-on-year. The company’s performance increased significantly. On the one hand, it benefited from the improvement of the profitability of the company’s traditional business PTA and DTY. In 2021, the company’s DTY achieved a revenue of 10.68 billion yuan, a year-on-year increase of 62.02%; The gross profit margin reached 19.12%, with a year-on-year increase of 9.62 percentage points; PTA achieved a revenue of 7.117 billion yuan, a year-on-year increase of 58.99%, and a gross profit margin of 2.81%, a year-on-year increase of 3.17 percentage points. At the same time, the company completed the acquisition of sierbang in 2021, which brought a large increment to the overall performance of the company. Among them, in 2021, Sri Lanka achieved an operating revenue of 17.893 billion yuan, a net profit of 3.776 billion yuan and a net interest rate of 21.1%. In terms of sectors, acrylonitrile and EVA are the main products contributing to the performance of Sri Lanka. Among them, acrylonitrile achieved a revenue of 6.874 billion yuan in 2021, with a year-on-year increase of 87.82% and a gross profit margin of 31.47%, with a year-on-year increase of 20.03 percentage points; Due to the tight supply and demand of the industry, the price of EVA rose rapidly. In 2021, the revenue was 6.396 billion yuan, a year-on-year increase of 78.87%, and the gross profit margin was 44.13%, a year-on-year increase of 19.89 percentage points.
In 2021q4, the company achieved a revenue of 12.448 billion yuan, a month on month ratio of – 11.50% (after adjustment); The net profit attributable to the parent company was 628 million yuan, with a month on month ratio of – 38.70%, which was mainly caused by the rise in the price of raw materials and the slight decline in the price of EVA and other products.
In terms of period expenses, the company’s sales / management / financial expense ratio in 2021 was 0.30% / 2.07% / 2.11% respectively, and the change over the same period last year was + 0.09% / + 0.16% / + 0.12% respectively. The increase in management expenses was mainly due to the increase in personnel and shutdown maintenance expenses in the current period; Meanwhile, in 2021, the net cash flow generated from the company’s operating activities reached 5.334 billion yuan, a year-on-year increase of 33.94% (after adjustment), mainly due to the expansion of the scale of income and the increase of collection in the current period.
The refining and chemical project will be put into full operation soon, with obvious advantages in scale and product structure
In June 2021, the first batch of core units of Shenghong 16 million T / a refining and petrochemical integration project were handed over. At present, preparations for commissioning are being made. It is expected that it can be put into operation in 2022 to contribute to the performance increment. Compared with traditional refining and chemical enterprises, Shenghong refining and chemical has obvious advantages in scale and product structure. Its single line scale reaches 16 million tons. It has the largest atmospheric and vacuum distillation unit in China, which can effectively reduce unit energy consumption, improve equipment efficiency and show strong cost competitiveness; At the same time, Shenghong refining and chemical high value-added chemicals account for 69%, and the profitability of the project is stronger. The company also actively arranged downstream deep processing projects, proposed “2 ethylene glycol + phenol / acetone project” and “POSM polyol project”, increased production capacity of ethylene oxide, styrene and polyether polyols, further extended the industrial chain and cut into the field of polyurethane; At the same time, Hongke new materials, a subsidiary of Shenghong refining and chemical company, also plans to build a degradable material project. Phase I includes 340000 T / a maleic anhydride unit, 200000 t / a BDO unit and 180000 T / a PBAT unit. The added value of the product is worthy of further improvement. At present, the listed company has held 100% equity of Shenghong refining and Chemical Co., Ltd. until the refining and chemical project is fully put into operation, the company will form an industrial matrix of “refining and chemical + Polyester + new materials”. While the performance has been greatly improved, the refining and chemical sector will become a raw material guarantee platform for polyester chemical fiber industry and new material industry, with significant integration advantages.
Inject strong profitability into Sri Lanka, and the company cuts into the field of new energy and new materials
In 2021, the formula implemented major asset restructuring and acquired 100% equity of sierbang. At present, sap has a production capacity of 780000 tons of ethylene oxide and ethylene oxide derivatives, with an annual output of 780000 tons of ethylene oxide and 300000 tons of ethylene oxide derivatives, and its annual additional capacity of 780000 tons. In 2021, Sri Lanka achieved an operating revenue of 17.893 billion yuan, a net profit of 3.776 billion yuan and a net interest rate of 21.1%. Through this transaction, the company placed high-quality assets with strong profitability, further expanded its main business of high value-added olefin derivatives, increased diversified petrochemical and new energy and new materials and chemicals, further improved the layout of industrial chain and continuously enhanced its core competitiveness. The new capacity of Sri Lanka has been steadily promoted, and the propane industrial chain project is actively under construction. The main capacity includes 700000 T / a PDH, 520000 T / a acrylonitrile and 180000 T / a MMA, of which 260000 T / a acrylonitrile has been put into operation at the end of 2021, and the remaining capacity is expected to reach production in 2022; The EO capacity expansion and reconstruction project is also in the construction stage (with an additional capacity of 100000 tons / year). At the same time, the company plans to further expand the capacity advantage of EVA, and plans Shanghai Pudong Development Bank Co.Ltd(600000) T / a photovoltaic EVA and 100000 t / a hot-melt EVA. With the continuous implementation of new production capacity, the structure of high-end products in Sri Lanka has been improved day by day, and the profitability has been continuously enhanced. The company will gain new growth momentum.
The production capacity of polyester filament has expanded steadily, and the leading advantage of differentiation is remarkable
The company is the leader of polyester filament differentiation. By the end of 2021, the company has a differentiated fiber production capacity of 2.6 million tons / year, with a differentiation rate of more than 90%, mainly high-end DTY products. At the same time, the company has sufficient reserves of new polyester filament projects, with a proposed capacity of 2.45 million tons / year under construction, mainly including 200000 tons / year capacity of ganghong fiber, 1 million tons / year capacity of Guowang Suqian phase I and phase II, 250000 tons / year capacity of Ruibang phase II and 1 million tons / year capacity of Honghai new materials, which are expected to be put into operation in the next few years. With the continuous construction of new projects, the scale advantage of the company in the field of polyester filament will continue to strengthen, and the filament business will bring stable performance increment to the company in the next three years.
Continue to increase R & D investment and innovation driven development
Adhering to the concept of innovation driven development, the company has successively established the national advanced functional fiber Innovation Center (Suzhou) and petrochemical Innovation Center (Shanghai), and continued to increase cutting-edge R & D investment. In 2021, the company’s R & D expenses reached 427 million yuan, a year-on-year increase of 72.48%.
At present, the company has realized import substitution of a number of technical products to fill the gap in China. Among them, sierbang has developed photovoltaic grade EVA, which has been appraised by China Petroleum & Chemical Corporation(600028) Federation. The product performance index has reached the international advanced level of similar products, and the overall technology has reached the international advanced level; By the end of the reporting period, Sri Lanka had 6 invention patents and 49 utility model patents. At the same time, the company focuses on the technical development of civil polyester filament products, has successively overcome the technical barriers of microfiber, built a world-leading renewable PTT polyester and fiber industry chain with complete intellectual property rights, took the lead in putting into operation the self-developed melt direct spinning production line from plastic bottle to spinning in the world, and has independent intellectual property rights in a variety of functional fiber production technologies. As of the end of the reporting period, the company’s polyester chemical fiber sector has a total of 39 invention patents, 163 utility model patents and 5 appearance patents. Through continuous innovation, the company has built a high-level scientific and technological R & D system, gradually transformed the company from seizing the market to creating the market, and gradually improved its development initiative.
It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 8.651 billion, RMB 13.444 billion and RMB 16.91 billion respectively, and the EPS will be RMB 1.79, 2.26 and 2.84/share, corresponding to 8, 6 and 5 times of PE, maintaining the “buy” rating.
Risk tips: the implementation of policies, the construction progress of new production capacity is not up to expectations, the contribution performance of new production capacity is not up to expectations, the price of raw materials fluctuates, the change of environmental protection policies, the economy drops sharply, and the price of crude oil fluctuates sharply.
