\u3000\u3000 Wanhua Chemical Group Co.Ltd(600309) (600309)
Event: the company announced the performance forecast for 2021. It is estimated that the net profit attributable to the parent company in 2021 will be RMB 24-25.2 billion, with a year-on-year increase of 139% – 151%. Among them, the net profit in the fourth quarter was RMB 4.458-5.658 billion, a year-on-year increase of 77.33% – 125.06% and a month on month decrease of 25.84% – 9.86%. The company’s performance basically meets expectations.
The industry boom is rising, and the volume and price of the company’s products are rising. In 2021, benefiting from the global economic recovery, the market demand is boosted and the price of chemical products is increased. The annual sales volume and price of the company’s main products rose simultaneously. According to the data of Zhuo Chuang information, the annual average prices of pure MDI and aggregate MDI were 22269.33 yuan / ton and 19989.3 yuan / ton respectively, with a year-on-year increase of 24.25% and 36.03%. In addition, the company announced that the 500000 ton MDI expansion project was put into operation in February 2021, promoting the improvement of annual production and sales. In terms of petrochemical business, the company’s 1 million ton ethylene plant successfully produced qualified products in November 2020, which effectively boosted the production and sales of petrochemical products in 2021. Overall, the volume and price of various businesses increased simultaneously, which promoted the substantial growth of the annual performance. From the perspective of the fourth quarter, the price of MDI increased slightly month on month, and the product profit increased slightly. However, due to the maintenance of Ningbo MDI phase I and phase II and the production failure of BC company, the production and sales of MDI are expected to decline month on month in the fourth quarter. In addition, the overall price of petrochemical products rebounded in the fourth quarter, and the two factors led to the month on month decline of performance in the fourth quarter.
The prosperity of polyurethane business is expected to be maintained, and the petrochemical business is still increasing. At present, the polyurethane industry has an oligopoly industry pattern, and the industry competition pattern is stable. In the future, except for Wanhua Chemical Group Co.Ltd(600309) , the global polyurethane industry has few plans for new production capacity, and the industry pattern is expected to remain stable. On the demand side, the downstream demand for polyurethane is expected to maintain stable growth in the future. With the recovery of the global economy, the industry boom is expected to maintain. The company’s petrochemical business is still increasing. At present, the company’s ethylene phase II project has been started, with a production capacity of 1.2 million tons, and its products include ethylene, butadiene, polyolefin elastomer Poe, etc. With the further improvement of petrochemical production capacity, the synergy effect of industrial chain is also increasing, which can provide raw material supply for the company’s new material business and enhance the company’s comprehensive advantages.
The categories of new materials are constantly enriched and have broad prospects. On the basis of petrochemical business, the company continues to focus on fine chemicals and new materials business. The company has actively arranged many projects such as citral and derivatives, PC, synthetic spices, biodegradable plastics, lithium battery cathode materials, large-size monocrystalline silicon and other high value-added new materials. In January 2022, the company’s annual output of 50000 tons of lithium iron phosphate project was officially launched in Meishan, Sichuan. Relying on the quality and cost advantages of raw materials brought by the company’s petrochemical business, the company’s new material business has broad development potential, which promotes the company to move forward from a global polyurethane leader to a new material giant
Profit forecast and investment suggestions. It is estimated that the company’s EPS in 2021 and 2022 will be 7.82 yuan and 8.04 yuan. Based on the closing price of 95.32 yuan on January 20, PE will be 12.19 times and 11.86 times respectively. The valuation of the company is low, and the investment rating of “buy” is given to the company in combination with the industry status and development prospect of the company.
Risk tip: the industry competition intensifies and the progress of the company’s new projects is lower than expected
