\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 233 Tongkun Group Co.Ltd(601233) )
Event: Tongkun Group Co.Ltd(601233) released the annual report of 2021. During the reporting period, the company achieved an operating revenue of 59.131 billion yuan, a year-on-year increase of + 29.01%, and a net profit attributable to the parent company of 7.332 billion yuan, a year-on-year increase of + 158.44%. In the fourth quarter, the company achieved an operating revenue of 8.783 billion yuan, a year-on-year increase of – 32.50%, a month on month increase of – 56.43%, and a net profit attributable to the parent company of 1.171 billion yuan, a year-on-year increase of + 12.11%, a month on month increase of – 42.24%.
The company also issued a profit distribution plan for 2021, which plans to distribute a cash dividend of RMB 3.30 per 10 shares to all shareholders, with a total cash dividend of about RMB 788 million, accounting for about 10.75% of the annual net profit attributable to the parent company.
Comments: the company’s annual performance increased slightly lower than our previous expectations, mainly due to the impact of the “double control” policy in the fourth quarter. On a quarterly basis, the company’s filament business acquired the 500000 ton POY device of Siyang Haixin in the second quarter, realizing an increase in volume. At the same time, the downstream demand boom in the second quarter was superimposed, driving the filament performance upward; In the third quarter, the prosperity was relatively weak due to sufficient downstream goods in the early stage and less than expected peak season; In the fourth quarter, production was restricted by factors such as dual control of energy consumption, repeated regional epidemics, weak demand and downward filament prosperity. On the whole, the demand side was relatively weak in 2021. Under this background, the company fully carried out industrial coordination and self-discipline with the advantage of large production capacity, so that the filament business achieved an operating profit of more than 411 yuan per ton in 2021 (calculated according to the announced operating data), an increase of nearly 305 yuan year-on-year. In addition, Zhejiang Petrochemical contributed 4.46 billion yuan of investment income in the whole year, further raising the profitability. In the later stage, with the gradual conversion of phase II project to fixed assets, it is expected to contribute to the performance stably.
The growth attribute of the company is significant, and the filament should be seen: according to the announcement, by the end of 2021, the company has a polymerization capacity of 8.1 million tons / year and a filament capacity of 8.6 million tons / year, with a Chinese market share of 20% and a global share of more than 13%. In the long run, the company announced three major projects: Jiangsu Rudong Yangkou Port, Jiangsu Shuyang and Fujian Gulei. After the completion of the three major projects, the company’s long-term production capacity will reach 15.1 million tons, with significant growth attribute. According to the announcement, during the year, the company’s Yangkou Port project is expected to have 5-6 units in production (two of which have been put into operation), and the first 2.5 million T / a PTA unit is expected to be put into operation in October 2022. At the same time, the first Hengyang weaving workshop under Shuyang project was officially put into production on April 19. The company began to enter the downstream weaving of filaments, and the development model of the whole industrial chain was further developed. In the future, driven by the expansion mode of the company’s whole industrial chain, the upstream and downstream are expected to work together to further broaden the company’s profit space. In addition, the supply side pattern of the filament industry continues to improve and the industrial concentration continues to increase. According to Baichuan data, the current industrial Cr6 polymerization capacity concentration is more than 60%. In the future, the company is expected to give full play to the advantages of large production capacity and continue to benefit under the background of industry coordination and self-discipline. As the impact of the epidemic is gradually cleared, the logistics transportation recovery or driving the reduction of downstream procurement resistance, the demand side replenishment power is expected to gradually appear, and the industry boom can be reversed.
Zhejiang Petrochemical phase II is gradually becoming solid, with abundant downstream high value-added products: according to the announcement, Zhejiang Petrochemical phase II has been fully put into operation, and a variety of differentiated high value-added varieties are arranged downstream, including ABS, photovoltaic grade EVA, fdpe, polycarbonate, polyether polyol, etc. With the gradual conversion of Zhejiang Petrochemical phase II to fixed assets, it is expected to continue to contribute to the incremental investment income.
Investment suggestion: maintain the Buy-A investment rating. Considering the impact of the epidemic on demand and the impact of geopolitical risks on crude oil prices, we lowered the performance expectation of the company in 2022. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 7.846 billion yuan, 9.831 billion yuan and 11.259 billion yuan respectively.
Risk tips: rising raw material prices, repeated epidemics, less than expected demand, less than expected projects under construction, safety and environmental production risks, etc.
