\u3000\u3000 Zhejiang Xinan Chemical Indusyrial Group Co.Ltd(600596) (600596)
Event: the company released the performance forecast for 2021. In the 21st year, the company expects to realize the net profit attributable to the parent company of 2.6-2.7 billion yuan, a year-on-year increase of 344% – 362%, and the net profit deducted from the non attributable to the parent company of 2.6-2.7 billion yuan, a year-on-year increase of 548% – 574%. Among them, Q4 is expected to realize a net profit attributable to the parent company of RMB 1-1.1 billion in a single quarter, with a year-on-year increase of 131% – 154% and a month-on-month increase of 32% – 45%.
Comments:
“Silicon + glyphosate” two wheel drive, and the price rise has contributed to the substantial growth of performance: in 21 years, the supply and demand pattern of metal silicon, silicone and glyphosate has been significantly improved, the price has risen sharply, and the profitability of the company has been significantly improved. The average prices of metal silicon, silicone and Glyphosate in 21 years were 23000 yuan / ton, 32000 yuan / ton and 48000 yuan / ton respectively, with a year-on-year increase of 95%, 70% and 106%. In addition, the company’s strategic layout of “Silicon + glyphosate” has significant synergistic effects: dilute hydrochloric acid, a by-product in the process of silicone production, is the raw material for glyphosate production, while methyl chloride, a by-product of glyphosate, is one of the raw materials for silicone monomer production. The company’s comprehensive production cost advantage is prominent. The improvement of industry prosperity superimposed on the company’s low-cost competitive advantage, which helped the company’s performance increase significantly in the past 21 years.
Deepen the layout of the whole silicon-based industrial chain and create a new driving force for performance growth: the company arranges the upstream and downstream of the industrial chain around the silicone business, basically realizes the self supply of metal silicon in the upstream, and makes positive progress in the layout of medium and high-end products in the downstream. Its current capacity of metal silicon is 100000 t / A, and the 100000 t / a capacity project and 200000 t / a industrial silicon powder processing project in Yanjin, Yunnan Province have been promoted in an orderly manner. At a time when the demand for metallic silicon is increasing rapidly and the supply is tightening due to power and production restrictions, the company can not only fully enjoy the dividends brought by the rising price of raw materials, but also ensure the profitability of silicone business based on the advantages of self production and supply of raw materials. At present, the company has a silicone monomer production capacity of 490000 tons / year, of which about 80% is used for its own use to produce downstream raw rubber, 107 rubber and other polymers, as well as end products such as mixed rubber, liquid rubber and sealant. In 21 years, the product sales increased significantly year-on-year, effectively improving the company’s operating performance. In addition, the company focuses on emerging industries such as 5g, new energy vehicles, UHV and medical health, focuses on the development of silicone terminal application technology, deepens the layout of the whole silicon-based industry chain, and cultivates new drivers of performance growth.
The prosperity of glyphosate industry continues to rise, and the company has fully benefited: with the high prosperity of Shenzhen Agricultural Products Group Co.Ltd(000061) , the planting enthusiasm of downstream farmers has increased, and it is currently in the peak season of traditional procurement in North America, superimposed with the prohibition of paraquat in many countries around the world, glyphosate as its substitute will expand its market share, the demand for glyphosate has increased, and the trend of tight supply and demand in the industry has become more and more obvious, Glyphosate prices may maintain an upward trend in the short term. At present, the company has a capacity of 80000 tons of glyphosate, which will fully benefit from the rise of glyphosate price.
Profit forecast, valuation and rating: due to the rise of glyphosate and silicone industry chain in 21 years, we raised the company’s profit forecast for 21 years and maintained the profit forecast for 22-23 years. It is estimated that the net profit attributable to the parent company in 21-23 years will be 26.12 (up 8%) / 26.19/2.842 billion yuan, equivalent to EPS of 3.19/3.20/3.47 yuan / share respectively, maintaining the “buy” rating.
Risk warning: the production progress is less than expected; Price fluctuation of main raw materials; Policy tightening
