\u3000\u3000 Polyrocks Chemical Co.Ltd(688669) (688669)
Event: on January 17, the national development and Reform Commission and other seven departments jointly issued the guidance on accelerating the construction of waste material recycling system (hereinafter referred to as the “guidance”). The goal is to basically establish the waste material recycling network system and build more than 1000 green sorting centers by 2025. The recycling capacity of nine major renewable resources, including waste plastics and waste rubber, reached 450 million tons. About 60 large and medium-sized cities took the lead in building a basically perfect recycling system for waste materials.
Comments:
The guidance emphasizes promoting the recycling of waste resources and promoting the processing and utilization level of renewable resources. The guidance emphasizes four aspects: improving the recycling network of waste materials, improving the processing and utilization level of renewable resources, promoting the development of second-hand commodity trading and remanufacturing industry, and improving the policy guarantee system for the recycling of waste materials. We believe that the requirements of “promoting the specialization of waste material recycling” and “improving the technical level of renewable resource processing and utilization” coincide with the application scenario of Polyrocks Chemical Co.Ltd(688669) currently arranged recyclable packaging material business. The company operates EPP incubator through recycling lease, and /PP packaging business reflects the specialization of recycling. At the same time, the company will produce and use EPP, a high strength, recyclable green foam material for the production of incubators, which reflects the improvement of the level of processing and utilization of renewable resources.
Establish an operating subsidiary to carry out the leasing and sales of circular packaging products. On January 10, the company announced that it would invest in the establishment of its subsidiary poly Chain Operation Co., Ltd. to carry out the development, leasing and sales of recycled packaging products and provide packaging recycling and operation services for customers in vegetables and fruits, aquatic products, fresh food, medicine, express delivery and other industries. The main products in the initial operation of the project are EPP cycle incubators that can replace white foam boxes and PP circulation hollow sector boxes which can replace cartons. In terms of EPP incubators, the company has previously announced to invest 300 million yuan to build EPP bead production capacity in Jiangling County, Hubei Province, to provide raw material support for EPP incubators, which has a certain industrial synergy. In the case of PP packaging, the main target market of the company is to replace cartons, foam boxes and other packaging materials in the current postal express area. Through the reuse of PP recycling packaging box, the generation of solid waste such as one-time express packaging can be greatly reduced, which is conducive to the construction of “waste free city”.
Profit forecast, valuation and rating: we maintain the company’s profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 103, 248 and 362 million yuan respectively, and the corresponding EPS will be 110, 2.65 and 3.87 yuan / share respectively. We believe that the performance of the company’s main traditional businesses such as flame retardants and modified plastics is expected to improve, and the business layout of phosphorus based new energy materials and recyclable packaging materials will open up growth space for the company. We still maintain the company’s “buy” rating.
Risk warning: the construction progress of the project is less than expected, the price of raw materials fluctuates, the downstream demand is less than expected, and the promotion of green recycling incubator products is less than expected.
