Event

The company released its 2021 semi-annual report: H1 Company achieved revenue of 6.471 billion yuan, an increase of 39.58% over the same period last year, and a net profit of 603 million yuan, an increase of 49.26% over the same period last year.

Brief comment

Driven by fluorine and silicon, the revenue of the main plate has increased.

In the first half of the year, revenue from several major sectors of the company increased. Among them, the fluorinated polymer sector achieved revenue of 1.94 billion, an increase of 28.9% over the same period last year, mainly due to the increase in downstream demand and prices of products represented by PVDF; the refrigerant sector achieved revenue of 1.22 billion, an increase of 17.7% over the same period last year, which was due to a sharp rise in the price of PVDF raw material R142b; the silicone sector achieved revenue of 1.61 billion, an increase of 41.97% over the same period last year, which was due to the recovery of the silicone market and the increase in prices. The chlor-alkali sector achieved revenue of 749 million, an increase of 23.98% over the same period last year.

The company's profit level improved, with operating costs of 4.775 billion, lower than the 39.6% year-on-year growth rate of revenue and 31.6% year-on-year growth, resulting in a gross profit increase of 1.696 billion, a year-on-year increase of 68.5%, a gross profit margin of 26.21% and a year-on-year increase of 4.5 pct.

From the perspective of statements, the administrative expenditure of ① was 247 million yuan, an increase of 25.8% over the same period last year, mainly due to an increase in total compensation and asset impairment; ② distribution and sales expenditure of 170 million yuan, an increase of 12.3% over the same period last year, mainly due to an increase in transportation costs; and ③ R & D expenditure of 303 million yuan, an increase of 51.08% over the same period last year, accounting for 4.68% of revenue, mainly due to increased investment in the development of high-end fluorosilicon materials.

Vigorously increase the star product PVDF, the second half of the year will gradually realize PVDF (polyvinylidene fluoride) in lithium battery positive binder, lithium battery diaphragm, photovoltaic backplane and other fields are widely used, the company PVDF products at the beginning of the year has successfully entered the global new energy industry leader's supply system, another product for solar backplane film. Thanks to the pull of demand in the downstream new energy field and the limited supply of production capacity, the market price of fluorinated polymer materials (PVDF) has increased significantly since May 21. As of August 30, the average quoted price of lithium grade PVDF in the market has reached 295,000 yuan / ton, an increase of 164%. The serious shortage on the supply side has also caused the prices of PVDF powder and granules in other application areas to rise. The current quotations have reached 255000 and 240000 respectively, an increase of 264% and 243% respectively over Q1. The company has 10000 tons of PVDF production capacity, and another 10, 000 tons of PVDF project approval procedures have been basically completed, and construction is expected to start in the second half of the year.

Due to the sharp rise of PVDF industry chain since the second half of the year compared with H1, it is expected that the performance of PVDF product line will increase significantly in the second half of the year.

Due to the explosion of PVDF, the main raw material R142b is also in short supply. the average quotation rose from 16,000 yuan / ton at the beginning of the year to about 110000 in August, an increase of 588%. The production of 1 ton of PVDF consumes about 1.65 tons of R142b, which consumes a large part of the profit. A large part of the profit from the skyrocketing price of PVDF contributes to R142b products, so the cost end pressure of enterprises equipped with R142b is relatively small, and the stability of production and performance is higher. The company is equipped with 33,000 tons / year R142b production capacity, covering the whole industrial chain of R152a-R142b-VDF-PVDF, which can fully meet the raw material demand after PVDF production expansion in the future. In addition, through new construction and technical transformation, the company will expand PVDF production capacity to 55000 tons and supporting raw material R142b capacity to 100000 tons by 2025, which will continue to benefit from the prosperity of the industrial chain.

Silicone boom is at a new high, and new production capacity is just around the corner.

In the first half of 21 years, the organosilicon division of the company has stable and high production, low inventory operation, and product prices remain high, especially the recent monthly benefit has reached a record high. From the perspective of the whole industry, in the medium and short term, the peak season of organosilicon demand is approaching, and the new production capacity before the end of the year is mainly due to Hesheng silicon industry Shihezi another 200000 tons of monomers, which is difficult to meet the exuberant demand, and the price of industrial silicon superimposed by raw materials has skyrocketed. Silicone prices simultaneously broke through the all-time high, reaching 36000 yuan / ton. In the long run, there will be about 740000 tons of production capacity from the end of 2021 to early 2022, but the production capacity is expected to grow by about 18% by the middle of 2022, and if the demand for emerging fields such as electronics and electrical appliances and new energy remains strong, the price of silicone is expected to remain high in 2022, and the company has another 300000 tons of silicone monomer and downstream deep processing projects, which are expected to be put into production step by step by the end of the year, doubling silicone capacity. Will bring high profit growth to the company.

The fluorine chemical industry chain is picking up, and the profit of refrigerants in the second half of the year will improve the recent prosperity of the fluorine chemical industry chain. According to Baichuan Yingfu, 1) hydrofluoric acid, the current average price of anhydrous hydrofluoric acid is 9600-9800 yuan / ton, which is mainly driven by the high price operation of its cost side sulfuric acid market and the recovery of demand-side refrigerant market, which is close to the level of Q1. 2) in terms of refrigerants, the upstream channel was opened in mid-August, and individual small types of refrigerants were boosted by the demand side, and the market remained high. It is expected that the contribution of H2 performance will be stronger than the previous month. Due to the imbalance of raw material supply, some mainstream refrigerants are in short supply in the market, and the mixed refrigerants are rising synchronously. The market is good: the overseas supply of tetrachloroethylene, the main raw material of R125, is affected by the weather and the domestic supply is tight. It rose rapidly from 7400 yuan / ton on August 20 to 15000 yuan / ton, and the average price supported by raw materials rose from 25000 / ton to 40,000 / ton at present, with the highest quotation reaching 50,000, which is expected to rise gradually in the later stage. At present, the price of R22 is close to 19,000 yuan / ton, it is 14000 at the beginning of the year, and the price on August 20 is still about 17000; the third generation agent has completed bottoming and gradually sold, and its profit contribution is stable. R32 mainstream price is 12000 yuan / ton, R134A mainstream transaction price is 21000 yuan / ton, which is still at the bottom of the cycle. As the large-scale production expansion enters the end, the economy is expected to improve slowly in 22 years. 3) in terms of fluoropolymers, the price of PTFE has a strong correlation with R22. The average price in 21 years so far is 53,000 yuan / ton, which is also significantly higher than that of 43000 last year, and is expected to be further increased in the second half of the year, leading to an increase in profits.

The layout of the whole industry chain of hydrogen energy membrane materials will occupy the high-quality track in the future.

The company's Future hydrogen Energy Company is the only and rare enterprise in the world that has the technology and industrial foundation of the whole industry chain from intermediate-monomer-resin-proton exchange membrane (hydrogen fuel cell membrane, electrolytic hydrogen production membrane, liquid flow energy storage battery membrane). Technology, market threshold is high and the future development potential is huge. Under the guidance of the goal of "carbon peak" and "carbon neutralization", hydrogen energy industry will become an important direction for the development of new energy industry in the future. The future hydrogen energy company was shortlisted for the second batch of national "specialized special new giant" enterprises supported by the Ministry of Industry and Information Technology. At present, the future hydrogen energy company has been declared for listing guidance, and other listing work is in steady progress. In the long run, with the support of relevant policies and technological progress, the hydrogen fuel cell has broad prospects for the future, and the company has an obvious competitive advantage by seizing the high-quality track ahead of time.

The "Dongyue Project Construction year" has progressed steadily, and the future long-term kinetic energy company has designated 21 as the "Dongyue Project Construction year". The capital expenditure in the first half of 21 is 1.128 billion, up 40% from 806 million in the same period last year. In addition to PVDF and silicone projects, the company has also carried out the construction of a number of important projects, including 20, 000 tons of PTFE project (10, 000 tons), 5000 tons of FEP project and other new fluorine-containing materials projects; supporting raw materials include 100000 tons of chloromethane project, 30, 000 tons of anhydrous hydrogen fluoride project; safety and environmental protection, including waste acid recovery and utilization projects, wastewater recycling projects, etc. Energy includes the acquisition of local power plant projects. Most of the above projects will be put into production in the second half of this year or next year, when the group's product scale will be further expanded. The construction procedures for the planned new projects are also being speeded up. The formalities for the 6000-ton FKM project have been basically completed, and construction is expected to start in the second half of the year. The horizontal and vertical integrated layout of each product will lay a solid foundation for the future development of the company.

It is estimated that the company's net profit in 2021 and 2022 will be 29.5 and 4.07 billion yuan respectively, corresponding to 16.9,12.2 times of PE, maintaining the buying rating.

Risk analysis: production safety risk, product price fluctuation risk, raw material price upward risk, industrial policy risk