\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 500 Sinochem International Corporation(600500) )
Event description
On the evening of April 15, Sinochem International Corporation(600500) released its 2021 annual report. The company achieved an operating revenue of 80.648 billion yuan in 2021, an increase of 48.9% year-on-year; The net profit attributable to the parent company was 2.175 billion yuan, a year-on-year increase of 608.9%; The non net profit deducted was 565 million yuan, a year-on-year increase of 4560901%, and the basic earnings per share was 0.78 yuan; It is proposed to distribute a cash dividend of RMB 0.8 per 10 shares to all shareholders.
The annual performance hit a record high, and the profitability of new chemical materials increased significantly year-on-year.
The company realized a net profit attributable to the parent company of 2.175 billion yuan, a year-on-year increase of 608.9%; The non net profit deducted was 565 million yuan, a year-on-year increase of 4560901%. The company’s annual performance hit a record high. During the reporting period, the company’s income from disposing Jiangsu Yangnong Chemical Co.Ltd(600486) assets was 1.57 billion yuan, which significantly increased the net profit attributable to the parent company this year. After deducting this non recurring factor, the company’s annual profitability still increased significantly year-on-year, and the deduction of non net profit achieved the best in history. The performance of 21q4 showed a loss, mainly due to the provision of goodwill impairment of 352 million yuan for the natural rubber asset group at the end of the year, resulting in a year-on-year increase of 317 million yuan in asset impairment loss. If the adjusted and added back net profit actually realized by the company is about 892 million yuan, the adjusted 21q4 operating profit contribution is positive, and the annual performance has increased significantly.
From the perspective of business segment segmentation, the operating revenue and profit of new chemical materials segment grew the fastest. The annual operating revenue reached 15.65 billion yuan, a year-on-year increase of 110.92%, and the gross profit margin increased by 6.49%. Among them, the volume and price of chlorobenzene, chlor alkali, epoxy resin, rubber antioxidant and other products increased simultaneously, and the prosperity of products gradually increased. The chemical materials marketing sector achieved an annual operating revenue of 23.04 billion yuan, with a year-on-year increase of 73.70%. The lightweight marketing business brought better cash flow to the company. As a new business segment of the company, strategic emerging business achieved an annual operating revenue of 310 million yuan, with a year-on-year increase of 447.63%; The gross profit was 40 million yuan, and ternary cathode materials also achieved the entry of core customers in the industrial chain.
In terms of the specific splitting of the new chemical materials sector, each sub sector has achieved a simultaneous increase in volume and price, among which chlorobenzene / chlor alkali, epoxy resin and rubber antioxidant have an obvious pulling effect on the overall profit. The annual revenue of basic raw material intermediates was 4.74 billion yuan, a year-on-year increase of 74.43%, the gross profit margin was 31.64%, a year-on-year decrease of 2.19%, the annual average price of core product chlor alkali / chlorobenzene increased by 10.6% / 77.7%, and the sales volume increased by – 1.452% / 0.003%. The annual revenue of high-performance materials was 6.59 billion yuan, a year-on-year increase of 71.07%, the gross profit margin was 17.89%, a year-on-year increase of 2.32%, the annual average price of core product epoxy resin increased by 51.3% and the sales volume increased by 25.05%. The annual revenue of polymer additives was 4.32 billion yuan, a year-on-year increase of 80.63%, the gross profit margin was 33.72%, a year-on-year increase of 4.57%, the annual average price of core product rubber antioxidant increased by 65.7% and the sales volume increased by 4.55% year-on-year.
Jiangsu Lianyungang Port Co.Ltd(601008) carbon 3 projects have been put into operation one after another to accelerate the integrated layout of the industrial chain.
The total investment scale of phase I of the company’s C3 project is 13.913 billion yuan. It is proposed to produce Shanghai Pudong Development Bank Co.Ltd(600000) tons of propane dehydrogenation (PDH), 650000 tons of phenol acetone, 240000 tons of bisphenol A, 400000 tons of propylene oxide and 150000 tons of epichlorohydrin (ECH), and add 180000 tons of epoxy resin. The project will be put into operation in 2022. The carbon three industry project is a key step for Sinochem International Corporation(600500) to build the whole industrial chain of new materials. After being completed and put into operation, it will help the company deepen the business layout of new chemical materials. According to the plan, after the project is put into operation, it is expected to achieve an average annual operating revenue of 11.011 billion yuan and an average annual total profit of 1.715 billion yuan. The company has significant competitive advantages in the carbon 3 project promoted in Jiangsu Lianyungang Port Co.Ltd(601008) project:
1) layout advantages of light raw materials: propane dehydrogenation is arranged upstream of the company’s C3 project. This route is the shortest route to obtain propylene, the highest yield and the cleanest production process. At the same time, it has cost advantages over other propylene acquisition routes under non extreme high oil prices. In addition, in the purchase of propane, the company can give full play to its traditional bulk trade advantages and credit advantages to obtain stable and low-cost propane resources. After the completion of the C3 project, the company’s epichlorohydrin, bisphenol A and other devices can fully meet the raw material demand of the original and new production capacity, have the ability to resist the fluctuation of raw materials, and can enhance the stability of the supply chain and smooth the periodicity.
2) advantages of industrial chain integration and circular economy: the project has deep synergy with the company’s original industrial chain. The company is the only one in China to produce propylene by dehydrogenation of propane and develop the product chain of “phenol ketone bisphenol A-epoxy resin”. The company has a production capacity of 240000 tons of bisphenol A, 350000 tons of epoxy resin and 250000 tons of ECH. Compared with non chemical companies in the same industry, the company has the ability to fully digest the downstream and improve the stability and flexibility of plant operation.
3) advantages of green process: the company is the only product chain in China that produces propylene by propane dehydrogenation and comprehensively utilizes hydrogen to develop hppo and dioxygen water method ECH. Hppo process and dioxygen water process ECH are green processes encouraged by national policies. They have the advantages of green, clean and low three wastes, and meet the requirements of national double carbon policy.
The implementation of the fixed growth plan helped the construction of the carbon 3 project, and major shareholders actively subscribed to demonstrate their confidence in development
On the evening of March 25, the company issued an announcement on the fixed increase plan, which plans to issue no more than 830 million shares to no more than 35 specific investors, including Sinochem, the controlling shareholder of the company, with a raised amount of no more than 5 billion yuan. It is intended to invest in the company’s phase I project of carbon three new materials industry (3.5 billion) and supplement working capital (1.5 billion). Previously, the company’s financing was mainly debt financing. In 2021, the company’s asset liability ratio was 65.62%. Through this equity financing, the company’s capital structure will be further optimized and the asset liability ratio will decline. At the same time, the fixed increase and the active subscription of Sinochem shares by the controlling shareholder demonstrate the controlling shareholder’s confidence in the development of the company’s carbon 3 project. According to the announcement, the company signed the conditional effective share subscription agreement with Sinochem on March 25, 2022. Sinochem, the controlling shareholder of the company, plans to subscribe for the number of shares actually issued this time in the same proportion according to the proportion of shares held by the company before this issuance, with a total subscription amount of no more than 2.7105 billion yuan. Before this offering, the controlling shareholder Sinochem shares held 54.21% of the company’s shares. The company also announced the proposal on the formulation of the company’s shareholder return plan for the next three years (20222024). It is planned that the accumulated profits distributed in cash in the next three years (20222024) will not be less than 30% of the average annual distributable profits realized in the last three years.
The company accelerated its transformation into the field of new materials and gradually became an important material science platform under Sinochem Group
In recent years, the company has accelerated the adjustment of strategic direction, gradually transformed from traditional trade business to fine chemical production platform, and built an innovative chemical new material enterprise driven by science and technology. With the company’s key projects Jiangsu Lianyungang Port Co.Ltd(601008) C3 Fine Chemical Industrial Park project, polymer additive project and ABS project put into operation, the company’s business structure will continue to optimize, the proportion of trade revenue will continue to decline, the proportion of production and sales of new chemical materials will gradually rise, and the company’s profit stability is expected to gradually improve. In May 2021, Sinochem Group, the parent company of Sinochem International Corporation(600500) and SINOCHEM Holding Co., Ltd. (hereinafter referred to as “Sinochem”) jointly reorganized with China National Chemical Corporation, were officially established. After the reorganization, the company has formed the main fine chemical industry with new chemical materials as the core. The company is positioned as an important new chemical material platform carrying Sinochem Group. With the group’s “science first” as the core development concept, the company focuses on new markets and new materials, increases R & D investment, and promotes the layout of domestic alternative key materials such as para aramid, lithium battery cathode materials and RO reverse osmosis membrane. In the future, the company is expected to become the group’s new material pipeline incubation platform, build a new material platform, and continue to enrich the layout of the new material field through endogenous extension.
Investment advice
In 2022, the company’s development will enter the fast lane, and the C3 new material project, polymer additive project and para aramid project are expected to contribute to the profit increment of the company. It is estimated that from 2022 to 2024, the net profit attributable to the parent company will be 1.496 billion yuan, 1.805 billion yuan and 2.407 billion yuan respectively, with a year-on-year increase of – 31.2%, 20.7% and 33.3%, and the corresponding PE will be 15, 12 and 9 times respectively. For the first time, give a “buy” rating.
Risk tips
(1) various risks caused by price fluctuations of raw materials and main products;
(2) safety production risk; (3) Environmental protection risks; (4) The production progress of the project is less than expected
