\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 03 Hengyi Petrochemical Co.Ltd(000703) )
Event:
The company issued the annual report of 2021 and the report of the first quarter of 2022:
(1) in 2021, the company achieved revenue of about 129 billion yuan, a year-on-year increase of + 49%; The net profit attributable to the parent company was about 3.4 billion yuan, a year-on-year increase of + 11%; The net profit attributable to the parent company after non deduction was about 2.8 billion yuan, a year-on-year increase of + 11%. Among them, Q4 company achieved a revenue of about 32.3 billion yuan in 2021, with a year-on-year increase of + 29% and a month on month increase of – 10%; The net profit attributable to the parent company was about 330 million yuan, up + 2068% year-on-year and – 62% month on month.
(2) in 2022, Q1 company achieved a revenue of about 33.25 billion yuan, a year-on-year increase of + 7.6% and a month on month increase of + 3%; The net profit attributable to the parent company was about 730 million yuan, with a year-on-year increase of – 39% and a month on month increase of + 125%; The net profit attributable to the parent company after non deduction was about 670 million yuan, a year-on-year increase of – 45%.
Comments:
The simultaneous rise of product volume and price helped the company’s revenue exceed 100 billion yuan in 21 years, and the narrowing of upstream refining and chemical price difference caused the decline of Q4 performance: the downstream terminal demand increased well in 2021, and the prosperity of “refining and chemical fiber” industry continued to rise. The simultaneous rise of polyester product volume and price promoted the company’s annual revenue to 128.98 billion yuan, a year-on-year increase of + 49%. In 2021, the sales volume of the company’s chemical fiber products was 7.407 million tons, a year-on-year increase of + 22%. In the 21st year, the price differences of naphtha cracking, PX, PTA, POY and FDY were 273 US dollars / ton, 195 US dollars / ton, 588 yuan / ton, 1393 yuan / ton and 2219 yuan / ton respectively, with a year-on-year increase of + 34 US dollars / ton, + 15 US dollars / ton, – 86 yuan / ton, + 320 yuan / ton and + 202 yuan / ton respectively. In Q4 of the 21st year, the price differences of naphtha cracking, PX, PTA, POY and FDY were US $204 / ton, US $129 / ton, 683 yuan / ton, 1493 yuan / ton and 2189 yuan / ton respectively, with a month on month comparison of US $68 / ton, – 97 dollar / ton, + 20 yuan / ton, + 294 yuan / ton and + 107 yuan / ton respectively. The narrowing of the price difference of upstream refining and chemical industry in the fourth quarter led to a month on month decline in the company’s Q4 performance.
Refining and chemical company’s gross profit is under pressure, and the company’s performance fell year-on-year in Q1 of 22 years: in Q1 of 22 years, the price differences of naphtha cracking, PX, PTA, POY and FDY were $213 / ton, $190 / ton, 526 yuan / ton, 1217 yuan / ton and 1851 yuan / ton respectively, with a year-on-year difference of – 68 dollars / ton, – 1 dollar / ton, + 71 yuan / ton, – 203 yuan / ton and – 422 yuan / ton respectively, with a month on month difference of + 9 dollars / ton, + 61 dollars / ton, – 157 yuan / ton, – 276 yuan / ton and – 338 yuan / ton respectively. Due to the tight supply and demand pattern of crude oil and geopolitical risk factors, the price of Q1 crude oil rose sharply in 22 years, which put pressure on refining and chemical gross profit, and the company’s performance fell year-on-year.
The profitability of Brunei project phase I continued to improve, and made every effort to promote Brunei phase II to enhance the company’s competitive advantage: in 2021, with the steady recovery of market demand in Southeast Asia, the cracking price difference of refined oil market of Brunei refining and chemical project in Southeast Asia continued to improve, and Brunei phase I project was operating at full capacity. The sales of refined oil, chemicals and other products of the company are smooth, with the output of 5.8717 million tons and 2.0838 million tons respectively, and the sales volume of 5.8978 million tons and 2.1137 million tons respectively. In the past 21 years, the subsidiary Hengyi Brunei realized a net profit of 1.25 billion yuan, a significant year-on-year increase of 161%. At present, the company is fully promoting the construction of phase II of Brunei refining and chemical project, and will add an “olefin polyolefin” industrial chain after it is put into operation. In addition, the demand for refined oil in Southeast Asia is strong, the market gap is large, the refining and chemical market has broad prospects, and the profitability of Brunei project is expected to continue to improve.
The release of production capacity contributed to the performance increment, and the integrated layout of the industrial chain consolidated the leading position in the industry: in 2021, the subsidiaries Haining new material intelligent environmental protection functional fiber project, Fujian Yijin new functional fiber project and Yisheng new material 1 line 3 million tons of PTA were successively put into operation. In January 22, Yisheng new material 2 line 3 million tons of PTA was officially put into operation, and the release of new production capacity continued to contribute to the performance increment of the company and continuously consolidate the leading position in the industry. At present, the company has a crude oil processing design capacity of 8 million tons / year; Participate in holding PTA production capacity of 19 million tons / year; The capacity of PIA is 300000 t / A; The polymerization capacity of the joint holding company is 10.465 million tons: the polyester fiber capacity is 7.765 million tons / year, and the polyester bottle chip (including RPET) capacity is 2.7 million tons; Caprolactam (CPL) has a production capacity of 400000 tons / year, and its production capacity ranks in the forefront of the industry. The industrial layout of “one drop of oil, two wires” is improving day by day.
The nylon production capacity scale has reached a new level, “polyester + nylon” two wheel drive development: the subsidiary Guangxi Hengyi new materials plans to invest 19.723 billion yuan to build an annual output of 1.2 million tons of caprolactam (CPL) – Nylon 6 chip (PA6) integration and supporting project. The project will be constructed in two phases. After its completion, it will achieve an average annual revenue of about 15.95 billion yuan. Its products involve high-end nylon fibers, engineering plastics and films. The company continues to extend the downstream industrial chain of aromatics and stabilize the leading position of nylon industry; At present, it has a polyester production capacity of 7.765 million tons / year, and plans to increase the polyester fiber production capacity of 1.85 million tons / year under construction, forming a unique two wheel drive industrial chain integration mode of “crude oil PX PTA polyester” and “crude oil benzene CPL nylon”.
The company plans to implement cash dividends, and the phase II share repurchase plan shows the confidence of the company in future development: the company plans to implement cash dividends of 733 million yuan, accounting for 21.52% of the company’s net profit attributable to the parent company in 2021. Since 2015, the company has launched two phases of executive incentive and four phases of employee stock ownership plan. The company plans to repurchase shares with a total capital of 500-1 billion yuan for the implementation of employee stock ownership plan or equity incentive, and the repurchase price shall not exceed 15 yuan / share. The share repurchase plan demonstrates the company’s confidence in future development and helps to improve the company’s long-term incentive mechanism.
Profit forecast, valuation and rating: considering the rise of oil price and the increase of the company’s cost as a refining and chemical enterprise, we lowered the company’s profit forecast for 20222023 and added the profit forecast for 2024. It is estimated that the company’s net profit for 20222024 will be 35.49 (down 45%) / 36.86 (down 51%) / 3.855 billion yuan respectively, and the corresponding EPS will be 0.97/1.01/1.05 yuan / share respectively. The company’s industrial layout of “one drop of oil, two wires” has been continuously improved and has broad growth prospects, so it maintains the “buy” rating.
Risk warning: Brunei project profit and phase II progress are not as expected; Risk of sharp fluctuations in crude oil prices; Polyester demand picked up less than expected.
