\u3000\u300 Fawer Automotive Parts Limited Company(000030) 1 Jiangsu Eastern Shenghong Co.Ltd(000301) )
Event:
On April 29, Jiangsu Eastern Shenghong Co.Ltd(000301) released the first quarterly report of 2022: in the first quarter of 2022, the company achieved an operating revenue of 13.773 billion yuan, a year-on-year increase of 23.58% and a month on month increase of 10.56%; The net profit attributable to the shareholders of the listed company was 688 million yuan, down 53.72% year-on-year and up 9.66% month on month; The gross profit margin reached 12.26%, down 10.82 percentage points year-on-year; The net interest rate reached 4.98%, a year-on-year decrease of 9.68 percentage points.
Key investment points:
The scale of revenue increased steadily, and the rising price of raw materials put pressure on profits
In Q1 2022, the company achieved a revenue of 13.773 billion yuan, a year-on-year increase of + 23.58% and a month on month increase of + 10.56%. The performance achieved steady growth year-on-year and month on month, mainly benefiting from the 260000 T / a acrylonitrile of Sri Lanka and 250000 T / a polyester filament of Ruibang technology. The new production capacity was put into operation at the end of 2021, and the production and sales volume of the company was improved. In terms of profitability, affected by the rise of crude oil price, the cost of main raw materials in the upstream increased. In 2022, the gross profit margin of Q1 company reached 12.26%, a year-on-year decrease of 10.82 percentage points; The net profit attributable to the parent company was 688 million yuan, a year-on-year decrease of 53.72% and a month on month increase of 9.66%. Compared with Q4 in 2021, the net profit attributable to the parent company increased month on month. On the one hand, it benefited from the performance release of new production capacity. At the same time, the price of EVA, the company’s main product, also rebounded steadily in Q1 in 2022.
In terms of period expenses, the company’s sales / management / financial expense ratio in Q1 2022 was 0.31% / 1.09% / 3.21% respectively, with a year-on-year increase of -0.01 / + 0.15 / + 0.85 PCT. The increase in management expenses was mainly due to the increase in personnel and salary expenses in the current period; The increase in financial expenses was mainly due to the increase in interest expenses. Meanwhile, in 2022, the net cash flow from Q1’s operating activities reached 494 million yuan, a year-on-year decrease of 78.78%, mainly due to the rise in the price of raw materials and the increase in the expenditure on purchasing goods.
EVA high boom continues, and the company’s production capacity continues to expand
The company is a leading enterprise of EVA in China. By the end of 2021, the annual EVA production capacity of the company has reached 300000 tons, accounting for about 20.38% of China’s total production capacity; Among them, the production capacity of photovoltaic grade EVA exceeds 200000 tons, accounting for about 28% of the global production of photovoltaic grade EVA, covering leading enterprises in the field of photovoltaic adhesive film such as Hangzhou First Applied Material Co.Ltd(603806) , haiyouwei and so on. At the same time, the company plans to further expand the production capacity advantage of EVA, and plans Shanghai Pudong Development Bank Co.Ltd(600000) T / a photovoltaic grade EVA and 100000 t / a hot-melt grade EVA, which continues to enhance the leading position in the industry. EVA resin has excellent performance and is widely used in photovoltaic, foaming materials, wires and cables and other fields. Under the background of the rapid development of photovoltaic, the downstream demand increases rapidly, and the EVA price also remains high. According to wind, as of April 29, the average market price of Q2 EVA in 2022 reached 27100 yuan / ton, with a year-on-year increase of + 32.48% and a month on month increase of + 22.04%. The high boom continues, and the company, as the leader of EVA in China, will continue to benefit.
Refining and chemical projects are waiting to be put into operation, and the shareholding ratio of listed companies will be increased again
In June 2021, the first batch of core units of Shenghong 16 million T / a refining and chemical integration project were handed over. At present, preparations for commissioning are being made. It is expected that it can be put into operation in 2022, contributing to some performance increment. Compared with traditional refining and chemical enterprises, Shenghong refining and chemical has obvious advantages in scale and product structure. Its single line scale reaches 16 million tons. It has the largest atmospheric and vacuum distillation unit in China, which can effectively reduce unit energy consumption, improve equipment efficiency and show strong cost competitiveness; At the same time, Shenghong refining and chemical products account for 69%, and the profitability of the project is stronger. The company also actively arranged downstream deep processing projects, proposed “2 ethylene glycol + phenol / acetone project” and “POSM polyol project”, increased production capacity of ethylene oxide, styrene and polyether polyols, further extended the industrial chain and cut into the field of polyurethane; At the same time, Hongke new materials, a subsidiary of Shenghong refining and chemical company, also plans to build a degradable material project. Phase I includes 340000 T / a maleic anhydride unit, 200000 t / a BDO unit and 180000 T / a PBAT unit. The added value of the product is worthy of further improvement. During the reporting period, Shenghong refining and chemical completed the relevant equity changes, and the listed company has held 999952% equity of Shenghong refining and chemical. When the refining and chemical project is fully put into operation, the company will form an industrial matrix of “refining and chemical + Polyester + new materials”. While the performance is greatly improved, the refining and chemical sector will become a raw material guarantee platform for polyester chemical fiber industry and new material industry, with significant integration advantages.
Considering the company’s historical profitability, project construction progress and epidemic situation, we adjusted the profit forecast. It is estimated that the company’s net profit attributable to the parent company in 2022, 2023 and 2024 will be 6.817 billion yuan, 13.018 billion yuan and 16.906 billion yuan respectively, and EPS will be 141, 2.19 and 2.84 yuan / share, corresponding to 9, 6 and 4 times of PE, maintaining the “buy” rating.
The implementation of risk warning 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.
