\u3000\u3000 Wanhua Chemical Group Co.Ltd(600309) (600309)
Event: Wanhua Chemical Group Co.Ltd(600309) release the annual performance forecast for 2021. During the reporting period, the net profit attributable to the parent company is expected to reach 24 ~ 25.2 billion yuan, a year-on-year increase of + 139 ~ 151%, and the net profit attributable to the parent company in Q4 is expected to reach 4.458 ~ 5.658 billion yuan, a year-on-year increase of – 5 ~ + 21% and a month-on-month increase of – 26 ~ – 6%.
In 2021, the company’s performance forecast was in line with expectations. The high prosperity of overseas MDI market under the new production capacity and the simultaneous rise in the volume and price of petrochemical, fine chemicals and other products were the main reasons for the significant growth of performance. Overall, in 2021, the company’s main products benefited from the mismatch between supply and demand in this round of chemical business cycle. Overseas unconventional monetary policy + financial stimulus supported the rapid recovery of residential consumption, and China’s “export substitution” played an obvious role. According to the data of China Customs, by November 21, the total export of MDI had reached 939000 tons, a year-on-year + 73%, a record high, Throughout the year, the export price of MDI has also been in an upward trend; Since Q3, the supply side has been affected by the dual carbon expectation and energy consumption dual control policy, superimposed with extreme weather disturbance and upward kerosene price, and the price boom of chemicals has risen in an all-round way. From the perspective of production and marketing, according to the company’s announcement, Q1 Yantai MDI technical transformation and capacity expansion and large ethylene production capacity also make a positive contribution to the performance.
The capacity expansion of isocyanate project continues to consolidate its leading position in the industry. According to Tiantian chemical, the future deterministic increment of MDI supply side mainly comes from Wanhua (600000 tons in Ningbo + 1.6 million tons in Fujian), and the rest comes from keschuang (410000 tons in the United States + 50000 tons in Tarragona in Spain, and the location of Baytown is uncertain), BASF (90000 tons in Caojing, Shanghai) and Jinhu, South Korea (200000 tons); On the demand side, considering the global MDI demand growth rate of 5 ~ 6% in recent years, the new production capacity of MDI basically matches the demand increment in the next three or four years. Generally speaking, according to the company’s announcement, every MDI technology breakthrough of Wanhua has been accompanied by a sharp decline in production capacity and cost in the past two decades, the market share has risen all the way, and brought excess profits to the company. After the implementation of MDI expansion in Fujian in the future, The proportion of the company’s global MDI capacity is expected to rise from 27% to 37%, and the industry pattern of “one super and many strong” will continue to strengthen.
In the medium and long term, the demand for building energy conservation + the restriction on external thermal insulation of exterior walls + the new mandatory standard for building energy conservation of the Ministry of housing and urban rural development is expected to drive the continuous growth of the demand for polyurethane thermal insulation materials in China downstream of MDI. In the future, the general direction of carbon neutralization is established, and under the trend of increasing building energy conservation requirements, the thickness of building insulation layer is required to increase accordingly. Under the existing external wall external insulation system, the “cheeky” phenomenon of insulation layer has brought huge safety risks. According to the notice of local housing and construction departments, since 2020, Chongqing, Jiaxing Shanghai and other places have issued restrictive policies on external wall insulation materials to varying degrees, especially in Shanghai. In the commonly used external wall insulation materials, according to CNKI data, under the same thermal insulation effect, the thickness of polyurethane rigid foam (PU) insulation board is only ~1/2 of rock wool or polystyrene foam board, which is 2/3 of polystyrene Extrusion board. Therefore, polyurethane insulation materials are expected to benefit from policy dividends in the long run. Further, if the safer external wall sandwich insulation and external wall internal insulation technology is popularized in the future, the “thin face” advantage of Pu board will be more prominent due to its occupation of indoor building area. On the other hand, the Ministry of housing and urban rural development recently issued the general code for building energy conservation and renewable energy utilization, which will be implemented from April 1, 2022. In addition to the improvement of building energy consumption level and energy efficiency requirements, the new standard also compulsorily includes the quantified building carbon emission intensity index for the first time, requiring an average reduction of more than 7kgco2 (M2 ″ a). According to CNKI, every 1kgpu material used in buildings, It is equivalent to reducing 75.5kg CO2 emission during its average service life, corresponding to 130kgco2 (M2 ″ a) (the external insulation thickness is 3.4cm Pu sector instead of 6cm polystyrene sector, and the service life is 25A, ρ Pu = 1.25g/cm3), which is ~ 19 times of the current standard, and the better thermal insulation characteristics of Pu board can also solve the “cheeky” stubborn disease of the current external wall external thermal insulation system. With the gradual strengthening and quantification of the new standards of construction industry policies, the demand for polyurethane thermal insulation materials in China downstream of MDI is expected to continue to grow in the long run.
The rapid development of photovoltaic industry brings huge incremental demand for Poe, and Wanhua is optimistic about localization and substitution. Under the general trend of global carbon neutralization + new energy in the future, Poe PV demand has three advantages: first, the steep carbon neutralization curve amplifies the expectation of new PV installed capacity in the world every year; Second, the rapid promotion of double-sided components has boosted the medium and long-term demand for Poe; Third, under the trend of photovoltaic parity, module performance and reliability have a far-reaching impact on the economic benefits of photovoltaic projects. Poe has both good anti PID performance and all weather weather weather resistance, and there is a huge growth space. However, corresponding to the strong demand, China’s Poe is completely dependent on imports, and the global production capacity is in the hands of several foreign enterprises such as the United States, Japan and South Korea. Under geopolitical uncertainties, it is urgent to solve the “neck” problem of photovoltaic supply chain. In recent 30 years, Dow has reached its peak with CGC metallocene catalyst and ring tube solution polymerization technology, and Poe production capacity accounts for half of the world, However, its core patents have expired since 2016, which is an excellent time for Chinese chemical enterprises to turn over the war. According to the company’s environmental impact assessment, Wanhua layout 200000 tons of Poe, including 92000 tons of octene. Poe has extremely high technical barriers to independent research and development, but Wanhua’s R & D system has been honed for more than ten years. Now it has abundant wings. Relying on the petrochemical integrated layout, it realizes the self-sufficiency of key raw material octahexene, and the cost side advantage is prominent. Now the pilot test breakthrough of the project is in sight, and industrialization is expected to be completed. Under the expectation of future prosperity, the profit space is flexible. Therefore, in the medium and long term, considering the potential huge demand increment of Poe in the future, Wanhua layout Poe is not only the responsibility of the leader, but also an important weight to realize the revaluation of the company’s new material sector.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 24.59 billion yuan, 25.24 billion yuan and 27.76 billion yuan, maintaining the Buy-A investment rating.
Risk tip: the project progress is less than expected, the product price fluctuates sharply, and the downstream demand is less than expected.
