\u3000\u3 China Vanke Co.Ltd(000002) 493 Rongsheng Petro Chemical Co.Ltd(002493) )
Event description
On April 26, Rongsheng Petro Chemical Co.Ltd(002493) disclosed the 2021 annual report. In 2021, the company achieved an operating revenue of 177024 billion yuan, an increase of 65.03% year-on-year; The net profit attributable to the parent company was 12.824 billion yuan, a year-on-year increase of 75.46%; The non net profit deducted was RMB 12.432 billion, a year-on-year increase of 95.91%.
The performance achieved stable growth, and Zhejiang Petrochemical Project contributed to the profit increment
The annual performance increased steadily, and the phase II project of Zhejiang Petrochemical was gradually put into operation. In 2021, the net profit attributable to the parent company reached 12.824 billion yuan, with a year-on-year increase of 75.46%, and the performance achieved stable growth. From the perspective of subsidiaries, Zhejiang Petrochemical Project is still the main source of profit. The annual crude oil processing volume of Zhejiang Petrochemical was 265241 million tons, realizing a net profit of 22.296 billion yuan, a year-on-year increase of 98.52%. The profit of the equity part of the company was 11.371 billion yuan, accounting for 88.67% of the net profit. The substantial growth of Zhejiang Petrochemical’s performance is mainly due to the contribution of phase I to the annual performance and the commissioning of some units in phase II. In addition, Sinopec, a wholly-owned subsidiary of the company, achieved a net profit of 1.244 billion, a year-on-year increase of 1399%, accounting for 9.7% of the net profit. The significant increase in performance is mainly due to the expansion of PTA production of Sinopec.
The company has resisted the impact of market fluctuations and improved its profitability. In 2021, the gross profit margin of the company’s sales was 26.51%, an increase of 6.8 percentage points over last year; The net interest rate was 13.36%, up 0.89 percentage points from last year. In 2021, the internal and external environment of the company was turbulent, and the overall profitability of the company was stable. On the one hand, it reflected the improvement of profitability brought by the optimization of the company’s products, and on the other hand, it also reflected the company’s pressure resistance under the fluctuating market environment. The three expenses of the company decreased steadily, and the R & D investment continued to increase, helping the follow-up company to develop new products. In 2021, the company’s sales expenses accounted for 0.09% of its operating revenue, a year-on-year decrease of 0.02 percentage points; Administrative expenses accounted for 0.39%, with a year-on-year increase of 0.06 percentage points; Financial expenses accounted for 1.64%, a year-on-year decrease of 0.36 percentage points; R & D expenses accounted for 2.21%, an increase of 0.40 percentage points year-on-year. The company’s net cash flow from operating activities was 33.565 billion, a year-on-year increase of 91.72%, and the net cash flow from financing activities was 30.837 billion, a year-on-year decrease of 13.32%. In terms of sectors, the petrochemical sector achieved a revenue of 141546 billion yuan, a year-on-year increase of 72.14% and a gross profit margin of 8.09%, down 16.19 percentage points year-on-year. The chemical fiber sector achieved a revenue of 14.26 billion yuan, a year-on-year increase of 40.94%; The gross profit margin was 7.87%, down 0.83 percentage points year-on-year.
Crude oil prices fluctuated at a high level, and the price difference between oil refining and refining narrowed. In the first quarter of 2022, under the background of local conflict escalation, the uncertainty of crude oil supply increased, and the international crude oil price rose 32% from the beginning of the year to $104.39/barrel on April 1, breaking the ten-year high. Under high oil prices, the profits of global refining and chemical enterprises are generally under pressure, the price difference of refined oil cracking decreases, and the operating rate of main refineries decreases. Under the repeated influence of the epidemic in some areas, the downstream demand for chemicals is generally light, and the refining and chemical price difference has narrowed. 22q1pta-px, polyester pta-meg, PX naphtha, ethylene glycol ethylene, styrene pure benzene ethylene, HDPE ethylene, acrylonitrile propylene, EVA ethylene vinyl acetate price spreads were + 3.76%, – 19.28%, + 8.23%, – 57%, – 17.29%, + 7.56%, – 40.13%, – 28.23% month on month, respectively.
The second phase of Zhejiang Petrochemical is gradually large-scale, with obvious advantages of large-scale and integration
At present, Zhejiang Petrochemical has 40 million tons of oil refining, 8 million tons of PX and 2.8 million tons of ethylene, including the new oil refining capacity of 20 million tons / year, 6.6 million tons / year aromatics and 1.4 million tons / year ethylene production capacity in phase II. In 2021, Zhejiang Petrochemical phase I will realize stable operation throughout the year, phase II will be completed and put into operation successively, and the full commissioning will be carried out in mid January 2022. In 2021, the company’s fixed assets increased by 37.342 billion yuan, including 9.229 billion yuan in phase I and 11.778 billion yuan in phase II. The proportion of phase II is only 12.45%. Zhejiang Petrochemical phase II is expected to fully contribute to the production capacity and performance increment in 2022. Zhejiang Petrochemical has the largest private refining and refining capacity in China. It has scale advantages and integrated cost advantages in refining, refining, PTA and polyester. The oil chemical ratio maintains a leading position in the refining and chemical industry, with chemicals accounting for 58.5%. It can flexibly adjust the product structure according to different market environments.
We accelerated the layout of new materials and steadily promoted many projects
Based on the advantages of its large chemical raw material platform and years of R & D accumulation, the company further extends to the new material industry chain and arranges high value-added functional films, new energy chemicals, high-performance engineering plastics and other materials. At present, the company’s 300000 ton photovoltaic grade EVA device has been successfully put into operation on December 22, 2021, and successfully produced photovoltaic grade EVA particles on December 29, 2021, alleviating the situation that the market is in short supply. The company has a production capacity of 200000 t / a dimethyl carbonate (DMC), which is mainly supporting the company’s PC device. It is planned to add a production capacity of 200000 t / A in the follow-up, which is mainly sold to lithium electrolyte customers, and the product quality meets the battery level standard. The company’s film product project has been successfully promoted. Its subsidiary Yongsheng technology has put into operation eight lines with a total capacity of 250000 tons of BOPET. In the future, the company will further upgrade to high-end functional film products.
Investment advice
We believe that relying on the advantages of a full range of raw materials platform, the company actively develops new downstream materials, continues to increase capital expenditure, extends to the downstream industrial chain, and improves the richness, differentiation and added value of products, so as to provide impetus for the development of the company. We expect that Zhejiang Petrochemical phase II will bring large profit increment to the company, and EVA and other new material projects are also expected to accelerate the implementation. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 15.175 billion yuan, 16.671 billion yuan and 18.366 billion yuan respectively, with a year-on-year increase of 18.3%, 9.9% and 10.2% respectively. The corresponding PE of the current stock price is 9, 8 and 7 times respectively, maintaining the “buy” rating.
Risk tips
The risk of sharp price decline of products; The risk that the project construction progress is less than expected; The risk of a sharp rise in crude oil prices.
