\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 30 Luxi Chemical Group Co.Ltd(000830) )
Event 1: on the evening of April 29, the company released its annual report for 2021. In 2021, the company achieved a revenue of 31.794 billion yuan, a year-on-year increase of + 80.73%; The net profit attributable to the parent company was 4.619 billion yuan, a year-on-year increase of + 459.95%. Among them, 2021q4 company achieved an operating revenue of 8.323 billion yuan, a month on month increase of – 7.53%, a year-on-year increase of + 50.92%; The net profit attributable to the parent company was 1.013 billion yuan, a month on month increase of + 4.03% and a year-on-year increase of + 185.76%.
Event 2: on the evening of April 29, the company released the first quarter report of 2022. In Q1 2022, the company achieved an operating revenue of 7.651 billion yuan, a year-on-year increase of + 23.09% and a month on month increase of – 8.06%; The net profit attributable to the parent company was 1.32 billion yuan, a year-on-year increase of + 32.15% and a month on month increase of + 30.35%.
Comments:
The price of chemical products rose sharply and the company’s performance increased significantly. With the rise of international crude oil prices, the market demand for chemical products has increased significantly, and the sharp rise of product prices has helped the company achieve a significant increase in revenue. In 2021, the operating revenue of the company’s basic chemical products increased by 150.93% year-on-year, with the fastest growth rate. Among them, the average selling price of dimethylformamide increased by 106.45% year-on-year, and the operating revenue increased by 130.73% year-on-year, providing the main increment for the company’s basic chemical performance. In 2021, the operating revenue of the company’s new chemical materials products increased by 66.36% year-on-year, of which the average selling price of octanol increased by 85.21% and the operating revenue increased by 147.51% year-on-year; The average selling price of nylon 6 chips increased by 33.53%, and the operating revenue increased by 51.85% year-on-year; The average selling price of n-butanol increased by 102.34%, and the operating revenue increased by 97.57% year-on-year. At the same time, the company’s revenue from chemical fertilizer products and other products also increased significantly, with a year-on-year increase of 24.35% and 141.60% respectively. Thanks to the increase in the price of main products and the advantages of Park integration, the company’s gross profit margin increased significantly in 2021, reaching 30.42%, an increase of about 14.61pct year-on-year. In addition, in 2021, the company’s R & D expenses reached 1.041 billion yuan, accounting for 3.27% of the company’s operating revenue, with a year-on-year increase of 79.35%. The continuous increase of R & D efforts will support the company to achieve the objectives of improving quality and efficiency, saving energy and reducing consumption. Under the background that geopolitics continues to push up the price of chemical products, the average price of Q1 dimethylformamide in 2022 is as high as 16073 yuan / ton, with a month on month increase of 1.96% and a year-on-year increase of 65.69%. The company’s Q1 gross profit margin in 2022 is 28.64%, with a month on month increase of about 8.24pct, and its performance continues to grow steadily.
Layout and improve the industrial chain towards the raw material end, and lay a solid foundation for future expansion. By the end of 2021, the company has an annual capacity of 400000 tons of caprolactam, 400000 tons of nylon 6, 400000 tons of hydrogen peroxide (converted into 100), 400000 tons of formic acid, 750000 tons of polyols and 22 tons of methane chloride. In addition, the company’s Shanghai Pudong Development Bank Co.Ltd(600000) T / a caprolactam nylon 6 phase I project is expected to be completed in September 2022, which will add 300000 t / a caprolactam and 300000 t / a nylon 6 capacity to the company. At the same time, the company’s 1.2 million T / a bisphenol a project phase I Project is expected to be completed and put into operation in 2022, and 200000 t bisphenol A products can be added at that time to meet the production and use of the company’s polycarbonate plant. The company actively carries out layout on the raw material side, effectively laying a solid foundation for expanding the new chemical material industry in the future.
It is planned to absorb and merge Luxi group, and SINOCHEM will directly control the company to improve management efficiency. On April 15, the company signed the agreement of intent to absorb and merge Luxi Chemical Group Co.Ltd(000830) and Luxi Group Co., Ltd. with Luxi group, Sinochem Investment Development Co., Ltd., Sinochem investment (Liaocheng) Co., Ltd., Liaocheng Caixin Investment Holding Group Co., Ltd. and Liaocheng Juju Equity Investment Co., Ltd. and other counterparties. The company will implement the absorption and merger of Luxi group by issuing shares to the above counterparties. After the implementation of this merger, Luxi group will cancel its legal personality, the shares of listed companies held by Luxi group will be cancelled, and SINOCHEM investment, Sinochem Liaocheng, Liaocheng Caixin and aggregate investment will directly hold the newly issued shares of listed companies. After the completion of the transaction, Sinochem Group will directly control the listed company, which will effectively improve the direct management efficiency of Sinochem Group, so as to give full play to the role of the listed company as the development platform of new chemical materials in Sinochem Group.
Equity incentive has been approved by SASAC, which is expected to enhance the cohesion of the company and help long-term growth. On April 14, the company’s restricted stock incentive plan was approved by the state owned assets supervision and Administration Commission of the State Council. This incentive plan intends to grant 276 incentive objects with a total of no more than 19.04 million restricted shares, and the corresponding grant price is 9.49 yuan / share. The incentive objects include directors, senior managers, middle managers and core backbone personnel of the company. The incentive plan takes the company’s net profit, return on net assets and EVA from 2022 to 2024 as the assessment criteria. The assessment objectives of net profit from 2022 to 2024 are RMB 2.138/23.62/3.449 billion respectively; The assessment objectives of return on net assets are 10.63%, 11.03% and 14.77% respectively. Meanwhile, the company’s EVA of the corresponding year must meet the assessment requirements issued by the group, and △ EVA 0 in the current year. We believe that this incentive plan will effectively enhance the overall cohesion of the company and provide sufficient impetus for the long-term growth of the company.
Profit forecast, valuation and rating: benefiting from the sharp rise in the price of chemical products, the company achieved significant growth in Q1 performance in 2021 and 2022, and the performance slightly exceeded expectations. We raised the company’s profit forecast from 2022 to 2023 and added the profit forecast for 2024. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 51.38 (up 18.7%), 54.49 (up 15.3%) and 5.762 billion yuan respectively, still maintaining the “buy” rating of the company.
Risk tip: the price of raw materials and products fluctuates, the risk of capacity construction, and the downstream demand is less than expected.
