Satellite Chemistry ( Zhejiang Satellite Petrochemical Co.Ltd(002648) )
Key investment points
Event: on April 26, the company released the first quarterly report of 2022: in 2022q1, the company realized an operating revenue of 8.138 billion yuan, a year-on-year increase of 124.54%; The net profit attributable to the parent company was 1.521 billion yuan, a year-on-year increase of 98.44%; The net profit deducted from non parent company was 1.54 billion yuan, with a year-on-year increase of 119.14%.
Comments:
Capacity release ensures performance growth, and cost control maintains strong profitability. In 2022q1, the operating revenue was 8.138 billion yuan, an increase of 124.54% year-on-year and a decrease of 4.7% month on month; The net profit attributable to the parent company was 1.521 billion yuan, an increase of 98.44% year-on-year and a decrease of 13.14% month on month; The net profit deducted from non parent company was 1.54 billion yuan, with a year-on-year increase of 119.14% and a month on month decrease of 12.45%. In terms of profitability, the gross profit margin in 2022q1 was 29.06%, a year-on-year decrease of 3.67pct, a month on month decrease of 1.98pct, and the net profit margin was 18.82%, a year-on-year decrease of 2.33pct and a month on month decrease of 1.73pct. The total cost of the company during the period was 192T, with a month on month decrease rate of 202147%. Among them, the sales expense rate was 0.31%, up 0.23pct month on month, the management expense (including R & D expenses, comparable caliber) rate was 4.6%, down 0.96pct month on month, the financial expense rate was 1.55%, down 0.48pct month on month.
The C3 industrial chain leader has obvious advantages, and the demand recovery performance is expected to continue to rise. In terms of output, the company’s annual output of 180000 tons of acrylic acid and 300000 tons of acrylic acid projects were successfully started at one time, contributing to the increment. In terms of price, affected by the repeated epidemic situation in China and the decline in demand, the average price of acrylic acid and butyl acrylate decreased by 6.7% and 3.9% month on month in 2022q1, and the price difference between propylene and propane decreased from 1818 yuan / ton in 2021q4 to 1704 yuan / ton in 2022q1, month on month – 6.3%; The price difference between acrylic acid and propylene decreased from 9248 yuan / ton in 2021q4 to 8180 yuan / ton in 2022q1, with a chain comparison of – 11.5%; The price difference between butyl acrylate and propylene decreased from 4979 yuan / ton in 2021q4 to 3898 yuan / ton in 2022q1, with a chain comparison of – 21.7%. In the short term, affected by the Spring Festival holiday, the Winter Olympic Games and the repeated epidemic situation, the demand of acrylic acid industry chain was weak in the first quarter, and the product price difference fell. In the second quarter, with the control of the epidemic situation in China and the gradual rise of temperature, coating users will return to work one after another. From the perspective of real estate and housing sales price, in January, the sales price of commercial housing in 70 large and medium-sized cities increased or decreased month on month, and the demand for acrylic acid is expected to increase steadily. In the long run, the pattern of acrylic acid industry has been optimized, and the company, as the industry leader, has stronger competitiveness; In addition, the downstream supporting facilities of propylene in the C3 industrial chain of the company are rich, and the company has terminal products such as PP, butyl acrylate and polymer lotion, which can effectively transmit the pressure of rising costs through a diversified product structure and earn excess returns; Meanwhile, the company plans to invest in new projects with an annual output of 800000 tons of PDH, 800000 tons of butyl octanol and 120000 tons of neopentyl glycol to fill the propylene gap in the existing C3 industrial chain. At the same time, butyl octanol can produce butyl acrylate and isooctyl acrylate, forming a closed loop of the industrial chain.
C2 industrial chain contributes profits by volume and price, and new capacity is ready in 2022. The company’s C2 phase I project has operated well since it was put into operation in May 2021. According to wind, in 2022q1, except for ethylene, the average price of ethylene glycol, ethylene oxide and LLDPE increased slightly by 2%, and the average price of ethylene glycol, ethylene oxide and LLDPE decreased by 7%, 11% and 4% month on month. The price difference between ethylene glycol and ethylene fell from 1193 yuan / ton in 2021q4 to 739 yuan / ton in 2021, with a month on month ratio of – 38%; The price difference between ethylene oxide and ethylene fell from 3181 yuan / ton in 2021q4 to 2148 yuan / ton in 2022q1, a month on month decrease of – 32%. While the company’s C2 project contributes to the performance increment in the first stage, the construction of new projects continues. Among them, the main equipment of phase II of C2 project (including 1.25 million T / a ethane cracking, 400000 T / a HDPE, 730000 T / a EO and Shanghai Pudong Development Bank Co.Ltd(600000) T / a styrene) has been installed, the pipeline installation has entered the final stage, and it is expected to feed trial production in the middle of 2022. The long-term equipment orders for the phase I project of the green chemical new material industrial park project (phase I) (including 100000 t / a ethanolamine, 400000 T / a polystyrene, 150000 T / a battery grade carbonate and 300000 t / a refined carbon dioxide) have been ordered, the civil construction has begun, and it is estimated that the trial production will be completed successively in the third quarter of 2022, and the later projects of the green chemical new material industrial park will continue to be constructed, Continuously contribute to performance increment.
We will actively allocate new energy production capacity and move forward to a low-carbon science and technology enterprise of new chemical materials. On the one hand, the company uses ethane, propane and other low-carbon raw materials to produce olefins and downstream products to reduce carbon emissions from the source; At the same time, the company’s green chemical new materials Industrial Park has arranged a 750000 T / a battery grade carbonate capacity to collect the carbon dioxide generated in production for the production of carbonates and apply them to lithium electrolyte to achieve real green development. On the other hand, the company actively responds to the national hydrogen energy policy and the growing hydrogen energy demand in the market, and actively develops the hydrogen energy business by using the surplus hydrogen in the production process. At present, the company’s 900000 ton PDH unit can produce 36000 tons of hydrogen, and the first phase of Jiangsu Lianyungang Port Co.Ltd(601008) C2 project can produce 70000 tons of hydrogen. When the second phase of C2 project and 800000 ton PDH unit are put into operation, the company’s hydrogen output will exceed 200000 tons, It is expected to become a major hydrogen supplier in the Yangtze River Delta.
Risk tips: price fluctuation of products and raw materials, project progress not meeting expectations, safety and environmental protection factors.
Profit forecast: considering the rhythm of capacity release and product boom, we expect the net profit attributable to the parent company from 2022 to 2024 to be 8.818 billion yuan, 10.348 billion yuan and 11.067 billion yuan respectively, maintaining the “buy” rating.
