\u3000\u3000 Wanhua Chemical Group Co.Ltd(600309) (600309)
On the evening of January 17, 2022, the company announced the forecast of annual performance increase in 2021. It is expected to realize the net profit attributable to the parent company of 24-25.2 billion yuan, with a year-on-year increase of 139% – 151%, and achieve earnings per share of 7.64-8.03 yuan / share.
Key points supporting rating
The performance forecast is in line with expectations. The company expects to realize a net profit attributable to the parent company of 24 billion yuan to 25.2 billion yuan in 2021, with a year-on-year increase of 139% to 151%. In the fourth quarter, the net profit attributable to the parent company is expected to reach 4.46 billion yuan to 5.66 billion yuan in a single quarter, a year-on-year decrease of 5% to an increase of 20.6%, and a month-on-month decrease of 25.8% to 5.9%. In the fourth quarter of 2021, the MDI price difference decreased month on month, and the operating rate of Ningbo base was limited, or it had an impact on the profitability. Throughout the year, vaccination rates in major economies continued to improve, the global economy recovered, market demand boosted, and chemical prices increased. The company’s MDI technological transformation, ethylene and other new production capacity and new devices were put into operation, and the volume and price of major products such as polyurethane, petrochemical and fine chemicals rose simultaneously, with a significant increase in operating performance year-on-year.
In the fourth quarter of 2021, the average price difference of MDI decreased month on month. According to the data of Baichuan Yingfu, the average prices of aggregated MDI and pure MDI (Wanhua, Yantai, East China) in the fourth quarter were 20779 yuan / ton and 22035 yuan / ton, up 2.9% and down 1.4% month on month, and the average price difference decreased 18% and 22% month on month. Throughout the year, the average prices of aggregated MDI and pure MDI (Wanhua, Yantai, East China) in 2021 were 20180 yuan / ton and 22287 yuan / ton, up 36.0% and 26.9% year-on-year in 2020, and the average price difference increased by 4.68% and decreased by 1.96% year-on-year. As of January 14, 2022, aggregate MDI, pure MDI and TDI (East China) had closed at 21400 yuan / ton, 21500 yuan / ton and 17450 yuan / ton, up 4.9%, 3.4% and 13.7% over the beginning of the year, respectively in the quantiles of 75.5%, 56.9% and 31.9% of the historical price.
Polyurethane expanded production, consolidated its leading position, and made multi-point layout of new materials. In November 2021, Wanhua Chemical Group Co.Ltd(600309) (Fujian) Co., Ltd. announced the environmental impact report of the project with an annual output of 1.08 million tons of aniline. The company plans to expand MDI project to 1.6 million tons / year and TDI project to 360000 tons / year in Fujian Industrial Park. At the same time, the company has actively arranged new material projects, including NMP, ternary material of lithium battery, lithium iron phosphate material of lithium battery, PBAT, polyether amine, etc. With the steady progress of polyurethane production expansion and the gradual increase of new material projects, the company’s performance is expected to continue to increase.
Valuation
Based on the expansion of the company’s Polyurethane project, the new material project has made steady progress, and the profit forecast has been raised. It is estimated that the EPS from 2021 to 2023 will be 7.9 yuan, 8.2 yuan and 9.3 yuan respectively. At present, the corresponding PE is 12.2 times, 11.7 times and 10.3 times, maintaining the buy rating.
Main risks of rating
The project progress did not meet expectations. Crude oil prices fluctuated sharply. The duration and impact of the epidemic exceeded expectations
