Satellite Chemistry ( Zhejiang Satellite Petrochemical Co.Ltd(002648) )
Q1 performance increased significantly year-on-year, and new projects contributed to high growth. Maintain “buy” rating
The company released the first quarterly report of 2022. Q1 achieved a revenue of 8.14 billion yuan, a year-on-year increase of + 124.5%; The net profit attributable to the parent company was 1.52 billion yuan, a year-on-year increase of + 98.4%; Deduct non net profit of RMB 1.54 billion, a year-on-year increase of + 119.1%. The stable operation of C2 industrial chain leads to high performance growth, and the high boom of acrylic acid hedges the rise of propane cost. We maintain the profit forecast and expect to realize the net profit attributable to the parent company of RMB 8.83/10.47/11.57 billion from 2022 to 2024, with a year-on-year increase of 46.9% / 18.6% / 10.6%; EPS is 5.13/6.08/6.73 yuan, corresponding to the current stock price, PE is 7.0/5.9/5.4 times. The C2 & C3 industrial chain of the company goes hand in hand, the downstream products extend to high-end, and the product matrix is further enriched. In the future, the company will maintain high growth and maintain the “buy” rating.
C2 & C3 industrial chains went hand in hand, and the profit of a single quarter increased significantly year-on-year
C2 contribution performance: Jiangsu Lianyungang Port Co.Ltd(601008) c2 phase I has operated stably since it was put into operation in May 2021, and the release of performance has led to a significant increase in single quarter profit year-on-year. At the raw material end, the average price of American ethane (MB) from 2021q3 to 2022q1 is 33.9/39.3/39.5 cents / gallon respectively. Compared with Q4 in 2021, the price of American ethane remains stable. On the product side, from 2021q3 to 2022q1, the average price of Brent crude oil is US $73 / 80 / 98 / barrel, the average price of ethylene is US $966 / 1073 / 1118 / ton, and the price difference between ethylene and ethane is US $638 / 692 / 735 / ton. Since the C2 industrial chain of the company was put into operation, the oil price center has increased, and the ethylene price has increased. As the associated gas of shale gas, the price increase of American ethane is limited, and the ethylene ethane price difference has been widened. Under the high oil price, the profitability of the company’s ethane ethylene industrial chain is prominent. C3’s profitability remained stable: in Q1 2022, the average price of propane (East China) was 843 US dollars / ton, with a year-on-year increase of + 38.7%. The average prices of acrylic acid, methyl acrylate, butyl acrylate and isooctyl acrylate were 15561 yuan / ton, 18280 yuan / ton, 16677 yuan / ton and 17574 yuan / ton respectively, with a year-on-year increase of + 45.5%, + 29.6%, + 1.4% and + 1.6%. The price of propane raw materials rose sharply year-on-year, but the company’s acrylic acid and ester maintained a high boom, and the hedging cost increased to a certain extent, The profitability of C3 industrial chain remains relatively stable.
New production capacity & low carbon transformation helps the company grow at a high speed
C2 project: 1.25 million T / a ethane cracking, 400000 T / a high density polyethylene, 730000 T / a ethylene oxide and Shanghai Pudong Development Bank Co.Ltd(600000) T / a styrene are expected to be put into trial production in June 2022. C3 project: 800000 T / a PDH, supporting 800000 T / a butyl octanol. It is expected to be put into operation by the end of 2023. The self-produced raw alcohol is expected to greatly improve the profitability of acrylate. New materials Industrial Park: 100000 t / a ethanolamine, 400000 T / a polystyrene, 150000 T / a battery grade carbonate and 300000 t / a carbon dioxide refining and recovery. It is expected to be put into trial production in Q3 in 2022. The subsequent planning is 100000 t / a ethanolamine, 400000 T / a polystyrene and 100000 t / A α- Olefins and supporting Poe, Shanghai Pudong Development Bank Co.Ltd(600000) T / a carbonate. Low carbon transformation: the company’s by-product hydrogen is expected to reach 300000 tons / year. The demonstration projects of hydrogen energy vehicles, energy storage and circular economy in the park are arranged. At the same time, it is planned to develop electronic hydrogen peroxide to produce acrylonitrile and DMC with nitrogen and CO2 produced by ethylene oxide. The company’s circular industrial chain and carbon capture help the company’s low-carbon transformation.
Risk warning: the project progress is not as expected, the price of raw materials fluctuates sharply, and the international trade policy changes
