\u3000\u3000 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) (600426)
Event: the company released the performance forecast for 2021. It is estimated that the annual net profit attributable to the parent company will be 7 ~ 7.5 billion yuan, with a year-on-year change of 289.3% ~ 317.1%; It is estimated that the net profit attributable to the parent company in the fourth quarter is 1.39 ~ 1.89 billion yuan, with a year-on-year change of 172.5% ~ 270.6% and a month on month change of – 23.2% ~ 4.4%.
The industry boom improved throughout the year, and the company’s profit elasticity appeared. In 2021, affected by the rising international oil price and the relationship between market supply and demand, the prosperity of the company’s main products improved significantly throughout the year. According to the data of Zhuo Chuang information, the annual average prices of urea, DMF, acetic acid, adipic acid, ethylene glycol, n-butanol and octanol increased by 36%, 105%, 148%, 58%, 37%, 101% and 94% respectively year-on-year. In the late third quarter, the coal price increased significantly, but it has fallen back. It is expected that the coal supply will turn loose under the regulation of national policies in 2022. Under the background of “double carbon”, the barriers to energy efficiency and environmental protection in the industry have been raised, and the company’s product profits are expected to remain relatively high.
The new material business is reported frequently, and the company will grow faster in the future. In October 2021, the caprolactam unit in the amide and nylon project of the company opened the process and entered trial production, with an annual output of 300000 tons of caprolactam and 480000 tons of ammonium sulfate. The subsequent 200000 tons of nylon 6 slicing unit is still under construction, and is expected to be put into operation in the first half of 2022. At the same time, the company’s Dimethyl Carbonate (DMC) technical transformation project was announced to be put into operation, with a production capacity of 300000 tons / year, of which the purity of electronic products reached 4N, which can be used as electrolyte solvent.
Breakthroughs have been made in Dec and EMC Research and development, and high-end solvents are ready to go. Recently, the company announced that the research and development of methyl ethyl carbonate (DEC) and diethyl carbonate (EMC) have been successful. The product adopts ester exchange process, the test device has opened up the process flow, and the product quality has reached the electronic level standard. In addition, according to the announcement of Dezhou Municipal Development and Reform Commission, the company’s high-end solvent project has been filed by the national development and Reform Commission. The project plans to invest 1.03 billion yuan and the construction period is 2021-2023. After the project is implemented, the company will have DMC 6 million tons / year, dec3 million tons / year and EMC 5 million tons / year, becoming a leading electrolyte solvent manufacturer in China.
The second base is located in Jingzhou and is expected to rebuild a Hualu. The company takes Jingzhou company as the main body (70% held by the company and 30% held by related parties). To build Jingzhou modern coal chemical base, the company will follow Dezhou process and build two sub projects of gas power platform and comprehensive utilization of syngas in the park, which have been officially started in November 2021. The landing of the second base marks that the land and coal indicators for the development of the company have been solved, and the company is expected to replicate its low-cost advantages in other places.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2021 to 2023 will be 3.44 yuan, 3.05 yuan and 3.27 yuan respectively, maintaining the “buy” rating.
Risk warning: the commissioning progress of the new project is less than expected, and the price of raw materials may fluctuate sharply.
