\u3000\u3000 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) (600426)
Events
On the 24th, the company issued an announcement on the advance increase of annual performance in 2021. It is expected to realize a net profit attributable to the parent company of 7-7.5 billion yuan in 2021, with a year-on-year increase of 5.202-5.702 billion yuan and a year-on-year increase of 289.32% – 317.13%.
Analysis
The steady release of performance has driven the development of the company to show a step-by-step improvement. On the whole, in 2021, affected by the increase in the prices of raw materials and finished products, the overall profits of the industry in which some of the company’s products are located increased significantly. As an excellent enterprise in the industry, the company benefited from the increase in the profits of the products, which led to a very bright overall performance of the company. According to the company’s performance pre increase announcement, the company realized a net profit attributable to the parent company of 1.388-1.888 billion yuan in the fourth quarter, Year on year growth of 173% to 272%, month on month change of – 23% to 4%. In the fourth quarter, although affected by the decline of raw material prices and product prices, there may be downward pressure on earnings month on month, it can be seen that the company has shown an obvious ladder rise in performance in 2021. Over the years, benefiting from the impact of capacity clearing and the improvement of industry pattern, the company’s niche products have shown an obvious increase in profit center, superimposed with the impact of double carbon policy, The company’s overall performance will rise in a central way. Due to the restriction of new production capacity on the supply side, the periodicity of some products of the company will weaken. It is expected that even if the cycle falls, the company’s product profitability will maintain a high level.
The large-scale operation of new projects has driven the company’s performance to rise steadily. In the fourth quarter, the company’s core project DMC products with a production capacity of 300000 tons were put into operation, and the product cost was significantly reduced, driving the company’s single product to contribute higher profits. In 2022, DMC project will contribute to the annual profit. At the same time, through the adjustment of ammonia alcohol production line and back-end cogeneration line, the company will try to reduce the production of products with low profit and improve the production of products with high profitability. The downward space of product profit brought by the expected cycle will be relatively small. At the same time, DMC, nylon 6, caprolactam and other products will contribute more, It is expected that the overall profitability of the company will remain at a high level. It can be said that the profitability of the company has been “qualitatively” improved.
Investment advice
In the fourth quarter, the prices of some coal chemical products showed a certain degree of correction, and the profit space of high-profit products in the early stage may be compressed, but it is expected that the overall profit level will still be at a good level. In the future, new materials and the second base will drive the improvement of the company’s performance. It is predicted that the company’s net profit attributable to the parent company from 2021 to 2023 will be 7.288 billion yuan, 7.385 billion yuan and 7.796 billion yuan respectively, EPS is 3.45, 3.50 and 3.69 yuan respectively, and the corresponding PE is 9.5, 8.9 and 8.4 times respectively, maintaining the “buy” rating.
Risk tips
Winter energy consumption control and environmental protection control affect the overall supply of the industry; The construction progress of the second base is not up to expectations; Impact of policy changes; Risk of large fluctuations in raw materials and products.
