\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 160 Zhejiang Juhua Co.Ltd(600160) )
The performance is in line with expectations, and the cost advantage of fluorine chemical raw materials is significant. We are optimistic about the subsequent projects under construction and maintain the overweight rating.
Key points supporting rating
The performance is in line with expectations. The company released its 2021 annual report. In 2021, it realized an operating revenue of 17.986 billion yuan, a year-on-year increase of 12.03%; The net profit attributable to shareholders of listed companies was 1.109 billion yuan, a year-on-year increase of 106287%, and the net profit after deducting non recurring profits and losses was 1.033 billion yuan, a year-on-year increase of 101541%. In the fourth quarter, the operating revenue in a single quarter was 5.363 billion yuan, a year-on-year increase of 4.28%, the net profit attributable to the parent was 851 million yuan, a year-on-year increase of 139547%, and the net profit attributable to the parent after deduction was 825 million yuan, a year-on-year increase of 15840829%. In the first quarter of 2022, the company realized an operating revenue of 4.608 billion yuan, a year-on-year increase of 28.07%, a net profit attributable to the parent of 234 million yuan, a year-on-year increase of 188003%, and a net profit attributable to the parent of 222 million yuan after deduction, a year-on-year increase of 325427%.
The overall price of products rose, and fluorine chemical raw materials increased significantly. Affected by the stable recovery of the global economy from the low base in 2020 and the strong recovery of China’s economy, the market demand for fluorine chemical products has expanded, the product prices have risen across the board, and the equivalent ratio of fluorine chemical raw materials, fluoropolymer materials and refrigerants has increased greatly. In 2021, the annual average price of fluorochemical raw materials increased by 80.91% year-on-year, the annual average price of refrigerants increased by 41.58% year-on-year (of which the price of HFCS increased by 42.31%), the annual average price of fluoropolymer materials increased by 48.04% year-on-year, and the annual average price of fluorofine chemicals increased by 6.27% year-on-year. The annual average price of fluorite, the main raw material, decreased by 2.64% year-on-year, improving the profitability. In terms of production and sales, in 2021, the sales volume of fluorine chemical raw materials decreased by 19.68% year-on-year, the sales volume of refrigerants increased by 2.63% year-on-year (including the sales volume of HFCS increased by 3.23%), the sales volume of fluoropolymer materials decreased by 2.58% year-on-year (including the sales volume of fluoropolymer increased by 27.98% year-on-year), and the sales volume of fluorine fine chemicals decreased by 35.54% year-on-year. In the first quarter of 2022, the prices of the company’s main products continued to operate at a high level, with a sharp rise year-on-year; Affected by covid-19 epidemic in the place where the company is located in mid March, the logistics was blocked, and the export volume of main products such as refrigerants, fluorine-containing fine chemicals, petrochemical materials and basic chemical products decreased to varying degrees. We believe that the sales volume of fluorine chemical related products may pick up in the second half of the year and the profit will improve.
The production time of 23.5ktapvdf technical transformation and expansion project is ahead of schedule. The second phase of 10kt / apvdf under construction is 6.5kt/a, which is expected to be completed in the first half of 2022. On April 22, 2022, the company disclosed the announcement of related party transactions in the construction of new 48ktavdf and 23.5ktapvdf technical transformation and expansion projects. It plans to contract out the project to the contractor consortium in EPC mode and contract out the manufacturing of 19 sets of core equipment of reaction system to related parties. The construction period is planned to start on February 25, 2022 and put into trial operation on December 30, 2022, which is much earlier than the previously estimated time of production. In addition, according to SSE e-interactive, the 10kt / a PVDF of the company has been completed, and the remaining 6.5kt/a is expected to be completed in the first half of 2022. The main unit of the remaining 13kt / ahcfc-142b project supporting PVDF unit has been put into operation. After the completion of several projects, the competitive advantage will be further improved, laying a solid industrial foundation for becoming a world-class fluorine chemical enterprise.
Valuation
Due to the early commissioning of 23.5ktapvdf technical transformation and expansion project and the gradual large-scale volume of 6.5kt/a of 10kt / apvdf phase II under construction in the second half of the year, the profit forecast is raised. It is estimated that the earnings per share from 2022 to 2024 will be 0.61 yuan, 0.94 yuan and 1.30 yuan respectively, and the corresponding PE will be 18.5 times, 12.1 times and 8.7 times respectively. The company is optimistic about the subsequent recovery of fluorine chemical industry, the continuous improvement of competitive advantage and the maintenance of overweight rating.
Main risks of rating
The epidemic risk of the company’s location, the downstream demand is less than expected, the project construction is delayed, and the product price fluctuates sharply.
