\u3000\u3000 China Jushi Co.Ltd(600176) (600176)
Core view:
Event China Jushi Co.Ltd(600176) released the annual performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be RMB 5.799-7.007 billion in 2021, with a year-on-year increase of 140-190%; The net profit attributable to the parent company after deduction was RMB 4.855-5.826 billion, with a year-on-year increase of 150-200%. It is estimated that the net profit attributable to the parent company in Q4 of 2021 will be RMB 1.5-2.7 billion, with a year-on-year increase of 31-138%; The net profit attributable to the parent company after deducting non profits was RMB 900-1.9 billion, with a year-on-year increase of 14% – 136%.
The high prosperity in the lower reaches of glass fiber drives the market demand. In 2021, the glass fiber market demand is strong, and the inventory of glass fiber enterprises in the whole year is at a historically low level. The Chinese market benefits from the expansion of new application fields, and the market demand is improving. The dual carbon policy and dual control of energy consumption contributed to the rapid development of the wind power industry. From January to November 2021, the cumulative installed capacity of wind power increased by 29% year-on-year, greatly stimulating the market demand of wind power yarn. Under the background of energy conservation and emission reduction, green and low-carbon travel, vehicle lightweight has driven the application of glass fiber materials and their products in the field of new energy vehicles. In addition, with the penetration and wide application of 5g, Internet of things and big data, the application scope of PCB has gradually expanded. As the upstream raw material of PCB, the market demand of electronic glass fiber yarn has also increased rapidly. At the same time, due to the resumption of foreign enterprises and the recovery of the market, the overseas market demand for glass fiber has gradually recovered. In 2021, the average monthly export volume of China’s glass fiber and its products increased by 23.17% year-on-year, and the export sales volume increased significantly. We believe that the rise of China’s new application market of glass fiber and the recovery of overseas markets will increase the total demand of glass fiber market in 2022 and improve the market demand in 22 years.
In 2021, due to the tight overall supply and demand of the glass fiber market and other reasons, the glass fiber price was at a historical high level. According to Zhuo Chuang information data, the average market price of winding direct yarn increased from 5683 yuan / ton at the beginning of the year to 6250 yuan / ton at the end of the year, an increase of 9.97%; The average market price of electronic yarn increased from 9850 yuan / ton at the beginning of the year to 14500 yuan / ton, an increase of 47.21%. In 2021, the volume and price of glass fiber rise together, driving the high growth of enterprise revenue. It is estimated that the company’s operating revenue in 21 years will be 18.635 billion yuan, a year-on-year increase of 59.73%. We believe that the increase of market demand for new applications of wind power in 2022 will support the high price of glass fiber roving; With the increase of supply in the electronic yarn market, the tension between supply and demand will ease, and the price will tend to a reasonable level.
Effective cost control lays a good foundation for the company’s performance growth. In 2021, the company continued to carry out automation transformation and digital chemical plant construction, give full play to the advantages of intelligent manufacturing, improve production efficiency, expand labor capacity, reduce production costs and improve profit margin through technical transformation. Under the background of rising fuel prices in 2021, effective comprehensive cost control has significantly increased the company’s profit level year-on-year.
As a leading enterprise in the glass fiber industry, the investment proposal has obvious advantages in cost, scale, technology and brand. With the increase of the penetration rate of glass fiber products and the expansion of glass fiber market, the company’s business has great room for development. It is estimated that the net profit attributable to the parent company in 21-23 years is RMB 6.013/68.23/7.479 billion, the earnings per share in 21-23 years is RMB 1.44/1.64/1.80, and the corresponding P / E ratio is 12.85/11.91/10.82. Maintain the “recommended” rating based on the company’s good development expectations.
The risk indicates the risk that the new capacity of the industry exceeds the expectation; The demand of downstream application fields is lower than the expected risk.
