\u3000\u3000 Zhejiang Juhua Co.Ltd(600160) (600160)
The company issued the performance forecast for 2021. In 2021, the company realized a net profit attributable to the parent company of 1.01 billion yuan to 1.19 billion yuan, with a year-on-year increase of 959% to 1148%. Among them, in Q4, the company realized a net profit attributable to the parent company of 750 million yuan to 930 million yuan, with a year-on-year increase of 1221% to 1538%. The net profit attributable to the parent company in Q4 increased more than expected.
Driven by the cost, the price of refrigerant rises, and the profit of the Integration Leader thickens significantly. Affected by the “double control” of energy consumption, the price of liquid chlorine accelerated at the end of the third quarter of 2021, driving the prices of chlorides such as dichloromethane, chloroform, trichloroethylene and Tetrachloroethylene to show a large increase. Driven by the cost, the third generation refrigerants R32, R134a and R125 achieved cumulative increases of 75.5%, 122.7% and 37.5% respectively from the beginning of September to the end of October (R125 was first started in mid and late August due to the lack of import supply of raw material tetrachloroethylene), which made the average prices of R32, R134a and R125 rise by 38.3%, 73.6% and 33.5% respectively in the fourth quarter compared with the third quarter. From the perspective of capacity scale, the company is the leading manufacturer of the third generation refrigerant in China; From the perspective of industrial chain integration, the company is a scarce refrigerant manufacturer in China with two major raw materials of chloride and hydrofluoric acid. Therefore, the company can fully enjoy the thickening of profit margin compared with its competitors when the cost drives the price of refrigerant. However, at present, the price of liquid chlorine has fallen back to the normal level. Due to the lack of cost support, the prices of the second and third generation refrigerants fell to a certain extent compared with the high point in October.
The suspension lithium PVDF was put into operation in the first half of the year, helping the company meet the performance inflection point. PVDF is used as cathode binder and diaphragm coating material in lithium battery, which has fast expansion speed at the demand end and low proportion in the downstream cost. In terms of supply, its raw material R142b is limited by quota (at present, nearly half of the PVDF production capacity in the industry is not integrated). In addition, PVDF is a high energy consumption product, resulting in a serious mismatch between supply and demand in the industry. At present, the company has built an annual production of 2500 tons of emulsion method, an annual output of 1000 tons of suspension PVDF, of which the suspension method lithium electric binder with PVDF has been sold to the market. The remaining suspension method has an annual output of 6500 tons of PVDF, which is expected to be put into operation in the first half of 2022. At present, the company has 20000 tons of R142b production capacity, with VDC production capacity accounting for 50% of China, and has a complete vdc-r142b-vdf-pvdf integrated industrial chain. Subsequently, the company plans to add 30000 tons of PVDF supporting R142b, of which 23000 tons of PVDF capacity in phase I is expected to be put into operation in the fourth quarter of 2023. In the medium and long term, Juhua, as a leading refrigerant enterprise in China, will continue to rely on the second-generation refrigerant production capacity such as R142b and R22 leading China, actively extend to downstream fluorine-containing polymer materials such as PVDF, PTFE and FKM, and build an integrated fluorine-containing new material industry cluster.
Profit forecast and investment suggestions. We estimate that the company’s operating revenue from 2021 to 2023 will be 20.474/24.484/24.879 billion yuan respectively, and the expected net profit attributable to the parent company will be 10.97/23.61/2.895 billion yuan respectively, corresponding to 28.4/13.2/10.8 times PE respectively. In the future, under the constraints of the Montreal agreement, after the refrigerant industry enters the fourth generation and continues to replace the third generation, the overall price center will rise significantly, and the value of the third generation refrigerant quota will be fully reflected. With the third generation refrigerant quota leading the industry and the leading fourth generation refrigerant layout, the medium and long-term profit center of the company will rise sharply and maintain the “buy” rating.
Risk tip: the demand for lithium battery is lower than expected, the product price is low, and the export of air conditioner is significantly lower than expected.
