\u3000\u3000 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) (600426)
Event: the company issued the announcement of annual performance increase in 2021. It is estimated that in 2021, the company’s net profit attributable to the parent company will reach 7 billion yuan to 7.5 billion yuan, with a year-on-year increase of 289% to 317%. Among them, Q4 is expected to realize a net profit attributable to the parent company of RMB 1.388 ~ 1.888 billion in a single quarter, with a year-on-year increase of 173% ~ 272% and a month on month change of – 23% ~ + 4%.
Comments:
The boom in the market of main products throughout the year promoted a sharp rise in revenue and profits. In 2021, the company’s main coal chemical products benefited from the recovery of China’s downstream demand and limited capacity increment. The supply was in short supply, the price rose sharply and the prosperity was high. According to Ifind data, in 2021, the average price of urea in Shandong was 2452 yuan / ton, a year-on-year increase of 42%; The average price of adipic acid in East China was 11324 yuan / ton, up 47% year-on-year; The average ex factory price of DMF of the company was 13250 yuan / ton, a year-on-year increase of 105%; The average ex factory price of glacial acetic acid was 6638 yuan / ton, a year-on-year increase of 144%. Among them, the average price of urea in Shandong in Q4 was 2668 yuan / ton, up 50% year-on-year and down 1% month on month; The average price of adipic acid in East China was 13254 yuan / ton, up 68% year-on-year and 16% month on month; The average ex factory price of DMF of the company was 18013 yuan / ton, up 102% year-on-year and 29% month on month; The average ex factory price of glacial acetic acid was 7260 yuan / ton, up 123% year-on-year and down 10% month on month.
The rising cost of raw materials slows down the growth of profits, and the operation of new material projects thickens the performance. In 2021, the increase of the company’s raw material cost slowed down the profit growth to a certain extent. In 2021, the average spot price of China Shipbuilding Industry Group Power Co.Ltd(600482) coal was 1041 yuan / ton, an increase of 80% year-on-year; The average spot price of Q4 single quarter China Shipbuilding Industry Group Power Co.Ltd(600482) coal was 1386 yuan / ton, up 113% year-on-year and 21% month on month. However, in October 2021, the company’s caprolactam and DMC technical transformation projects were put into operation as scheduled, thickening the performance of the fourth quarter. The company strengthened system optimization and production control, timely adjusted the product structure, and realized the stable and efficient operation of production units. Under the condition of increasing the cost of raw materials, the company’s performance in 2021 still achieved significant growth.
The foundation of Jingzhou base was officially laid, and the research and development of new battery solvent products was successful. According to the news on the company’s official website, the foundation of the company’s Jingzhou base was officially laid and started on November 5, 2021; On January 18, 2022, the company announced that it had successfully developed electronic grade methyl ethyl carbonate (DEC) and diethyl carbonate (EMC) products, which enriched the company’s product structure in the field of new energy and extended the industrial chain. The construction of the company’s Jingzhou new coal chemical project continues to advance, and the company’s performance is expected to further increase after it is put into operation; The successful pilot test of new battery solvent products provides a basis for the company to further expand its product line in the field of new energy in the future.
Profit forecast, valuation and rating: we maintain the profit forecast of the company. It is predicted that the net profit of the company in 21-23 years will be 73.96/81.24/8.871 billion yuan respectively, and the converted EPS will be 3.50/3.85/4.20 yuan / share respectively. We continue to be optimistic about Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) ‘s low-cost advantage and the transformation space of new materials and new energy, and maintain the “buy” rating.
Risk tip: the price of coal chemical products fluctuates sharply, the project construction progress is less than expected, and the demand of new materials and new energy industry is less than expected
