\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 233 Tongkun Group Co.Ltd(601233) )
Zhejiang Petrochemical will steadily expand its polyester production capacity in phase II
Event: on April 27, 2022, Tongkun Group Co.Ltd(601233) released the annual report of 2021: the operating revenue reached 59.131 billion yuan, an increase of 29.01% year-on-year; The net profit attributable to the parent company was 7.332 billion yuan, a year-on-year increase of 158.44% (after adjustment); The weighted average return on net assets was 23.85%, with a year-on-year increase of 10.20 percentage points (after adjustment). The gross profit margin of sales was 11.02%, with a year-on-year increase of 4.70 percentage points; The net profit margin on sales was 12.43%, up 6.20 percentage points year-on-year.
Among them, Q4 achieved a revenue of 8.783 billion yuan in 2021, a year-on-year increase of – 32.50% and a month on month increase of – 56.44%; The net profit attributable to the parent company was 1.171 billion yuan, a year-on-year increase of + 12.16% and a month on month increase of – 42.23%. The gross profit margin of sales was 10.46%, with a year-on-year increase of 3.67 percentage points and a month on month increase of 1.79 percentage points; The net sales interest rate was 13.39%, up 5.35 percentage points year-on-year and 3.30 percentage points month on month. At the same time, the company released the first quarterly report of 2022, realizing an operating revenue of 12.994 billion yuan, a year-on-year increase of + 16.72% and a month on month increase of + 47.94%; The net profit attributable to the parent company was 1.503 billion yuan, a year-on-year increase of – 12.45% and a month on month increase of + 28.37%. The gross profit margin of sales was 9.72%, a year-on-year decrease of 5.86 percentage points and a month on month decrease of 0.74 percentage points; The net sales interest rate was 11.62%, down 3.82 percentage points year-on-year and 1.77 percentage points month on month.
Comments:
The volume and price of polyester filament rose simultaneously, and Zhejiang Petrochemical boosted its performance to a new high
In 2021, the company’s revenue and net profit attributable to the parent company stood at a new height in history, of which the revenue was 59.131 billion yuan, a year-on-year increase of 29.01%; The net profit attributable to the parent company was 7.332 billion yuan, a year-on-year increase of 158.44% (after adjustment). The company’s performance achieved rapid growth, on the one hand, thanks to the simultaneous rise in the volume and price of the company’s main product polyester filament, in which the sales volume of POY reached 5.4242 million tons, a year-on-year increase of + 16.13%, and the average price reached 662932 yuan / ton, a year-on-year increase of + 36.28%; The sales volume of FDY reached 957100 tons, a year-on-year increase of – 12.10%, and the average price reached 716983 yuan / ton, a year-on-year increase of + 29.46%; The sales volume of DTY reached 760100 tons, a year-on-year increase of + 1.29%, and the average price reached 881072 yuan / ton, a year-on-year increase of + 33.16%. At the same time, the production of all units of the Zhejiang Petrochemical Project in which the company shares is progressing smoothly throughout the year, the operating load has increased steadily, and the economic benefits are remarkable.
In terms of sectors, the company’s chemical fiber business achieved a revenue of 57.923 billion yuan in 2021, a year-on-year increase of + 33.64%, and the gross profit margin reached 11.24%, a year-on-year increase of 4.91 percentage points; The petrochemical sector achieved a revenue of 106 million yuan, a year-on-year increase of – 94.25% and a gross profit margin of – 1.63%, a year-on-year decrease of 9.31 percentage points. The revenue of the petrochemical sector fell sharply, mainly due to the increase of the company’s filament output, the increase of PTA self-use demand and the decrease of export sales.
In terms of period expenses, the company’s sales / management / financial expense ratio in 2021 was 0.14% / 4.15% / 0.55% respectively, with a year-on-year rate of -0.03 / + 0.37 / – 0.16pct. In 2021, the net cash flow from the company’s operating activities reached 2.794 billion yuan, a year-on-year decrease of 16.46%, mainly due to the increase of employee compensation and taxes paid in the current period.
The investment income increased, and the Q1 performance increased month on month
In Q1 2022, the company achieved a revenue of RMB 12.994 billion, a year-on-year increase of + 16.72% and a month on month increase of + 47.94%. The company’s revenue increased month on month. On the one hand, the company benefited from the continuous expansion of filament production capacity and the improvement of production and sales; On the other hand, driven by the cost, the filament price showed an increasing trend. In 2022q1, the average market price of POY reached 7918.0 yuan / ton, a year-on-year increase of + 16.63% and a month on month increase of + 1.27%; The average market price of FDY reached 814972 yuan / ton, with a year-on-year increase of + 16.76% and a month on month increase of + 2.78%. In Q1 2022, the company realized a net profit attributable to the parent company of 1.503 billion yuan, with a year-on-year increase of – 12.45% and a month on month increase of + 28.37%. The year-on-year decline in profit was mainly affected by the rise in the price of upstream raw materials and the poor operation in the downstream under the background of the epidemic. Polyester filament was under short-term pressure. In 2022q1, the price difference of POY reached 139172 yuan / ton, with a year-on-year decrease of – 10.83% and a month on month decrease of – 20.79%; The price difference of FDY reached 156344 yuan / ton, with a year-on-year increase of -8.05% and a month on month increase of -13.52%. The narrowing of price difference also led to the decline of gross profit margin. In 2022, the sales gross profit margin of Q1 company reached 9.72%, down 5.86 percentage points year-on-year and 0.74 percentage points month on month. The investment income of polyester filament company was 1.9 billion yuan, which was narrower than that of Q1 in 2024, with a year-on-year decrease of 1.02% compared with that of Q1 in 2024. In terms of period expense ratio, the company’s sales / management / financial expense ratio in 2022 and Q1 was 0.17% / 4.49% / 0.71% respectively, with a year-on-year ratio of -0.03 / + 0.06 / – 0.02pct and a month on month ratio of -0.06 / – 1.92 / + 0.09pct; Meanwhile, in 2022, the net cash flow from Q1’s operating activities reached -3.733 billion yuan, a year-on-year decrease of – 0.25%.
Zhejiang Petrochemical has a bright investment income and is optimistic about the continuous contribution of performance increment in phase II
Since it was put into operation at the end of 2019, Zhejiang Petrochemical has operated stably and continuously contributed investment income to the company. In 2021, the prosperity of the chemical industry increased, the demand for major chemicals was strong, and Zhejiang Petrochemical also showed strong profitability. The annual revenue was 117545 billion yuan, an increase of 81.11% year-on-year; The net profit was 22.296 billion yuan, a year-on-year increase of 98.51%, of which Tongkun Group Co.Ltd(601233) held 20% shares, bringing 4.46 billion yuan of equity profit to the company. At the same time, the construction work of Zhejiang Petrochemical phase II has also been rapidly promoted. On January 13, 2022, the oil refining, aromatics, ethylene and downstream chemical products units of Zhejiang Petrochemical phase II have been fully put into trial operation. Compared with phase I, the output of fine chemical products in phase II of Zhejiang Petrochemical is richer and the added value is higher. With the full operation of phase II, it will significantly improve Tongkun Group Co.Ltd(601233) performance and help the company’s performance to a new level.
Polyester is firmly in the leading position, and the new production capacity continues to expand
The company is the leader of polyester in China. As of the end of the reporting period, the company has a polyester filament production capacity of 8.6 million tons / year and PTA production capacity of 4.2 million tons / year. It has achieved the first production and sales volume in China and the international market for more than 10 consecutive years. The Chinese market share of polyester filament is 20% and the global share is more than 13%. The company’s polyester production capacity expanded steadily. During the reporting period, the company completed the acquisition of the original “Jiangsu Haixin fiber” 500000 T / a polyester spinning project assets through Tongkun Hengxin new materials, a sun company established in Siyang, Jiangsu Province; In December 2021, the first 300000 t / a polyester plant of Jiatong project (Yangkou Port polyester integration project) was successfully started up and began to contribute performance increment to the company. At the same time, the company has planned a project with an annual output of 2.4 million tons of filament (staple fiber) in Shuyang, including the production capacity of 1.5 million tons / year of polyester filament and 900000 tons / year of polyester staple fiber. At present, the construction work has been fully carried out, and some equipment has been installed. It is expected that the first set of polyester filament device will be put into trial production in the third quarter or the beginning of the fourth quarter of this year.
At the same time, the company will also jointly invest with Fuhua Gulei to build a polyester fiber project with an annual output of 2 million tons. With the continuous expansion of polyester and PTA production capacity, the company’s integrated scale advantage will be further improved and its comprehensive competitiveness will be continuously enhanced.
R & D investment continued to increase, and the driving force of technology increased steadily
The company is committed to building an international R & D team and a high-level scientific and technological R & D platform. In recent years, R & D investment has continued to increase. In 2021, the company’s R & D expenses reached 1.46 billion yuan, an increase of 40.10% at the same time; The number of R & D personnel reached 1340, accounting for 5.34% of the total number of the company. During the reporting period, new breakthroughs were made in the laboratory construction and R & D project promotion of the company’s new materials research institute. The company continued to introduce high-end talents, integrate technical resources, and introduce projects through independent R & D and external cooperation, so as to create new value for the enterprise in the fields of functional fiber development, green catalyst research and development, circulating water treatment, circulating tray and exploration of various new materials. At the same time, the subsidiary Henglong company successfully won the title of “little giant” of the Ministry of industry and information technology, and was rated as the “invisible champion” cultivation enterprise in Zhejiang Province. With the continuous improvement of the company’s core competitiveness in R & D and technology differentiation, the company will continue to enhance its core competitiveness.
Carry out the repurchase plan to demonstrate the company’s confidence in development
Based on the confidence in the company’s future development prospects and recognition of its intrinsic value, on March 19, the company announced that it would repurchase shares by means of centralized bidding transaction. The repurchase amount shall not be less than 500 million yuan and not more than 1 billion yuan. As of March 31, 2022, the company has repurchased 7451100 shares in total, accounting for 0.309% of the total share capital of the company, with a total transaction volume of 132 million yuan. Through stock repurchase, it will effectively enhance the confidence of investors and promote the long-term and healthy development of the company.
Investment advice and profit forecast
It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 8.816 billion, RMB 10.131 billion and RMB 11.415 billion respectively, EPS will be RMB 3.36, RMB 3.86 and RMB 4.35/share, corresponding to PE of 4.3, 3.7 and 3.3 times, maintaining the “buy” rating.
Risk tips: the implementation of policies, the construction progress of new production capacity is not up to expectations, the contribution performance of new production capacity is not up to expectations, the price of raw materials fluctuates, the change of environmental protection policies, the economy drops sharply, and the price of crude oil fluctuates sharply.
