Summary of the report:
From trade to production, from traditional to high value-added industries. The company has acquired Yangnong Group and Shengao Chemical Co., Ltd. to become the world's leading chemical intermediates and polymer additive enterprises. In the later stage, the company will focus on new materials and new energy, and build technology-driven fine chemical enterprises.
Chemical intermediates and polymer additives business leading the world, continue to expand and consolidate the foundation. The company has a complete set of chlorobenzene and chlor-alkali industry chain, which can provide raw materials for the production of C 3, polymer additives, p-aramid and so on. The company has 180,000 tons of epoxy resin (Yangnong Jinhu) and 130000 tons of rubber antioxidant (St. Austria Chemical). The existing production capacity continues to expand timely and appropriately, consolidating the leading advantage and laying a good foundation for downstream development in advance.
To create the first green carbon 3 project in China. The C 3 project is expected to be put into production by the end of June 2022, including 480000 tons of bisphenol A, 650000 tons of phenol acetone, 400000 tons of epichlorohydrin, 150000 tons of epichlorohydrin and 180000 tons of epoxy resin. after completion, bisphenol An and epoxy (chlorinated) propane are among the top three in China. With the expansion of domestic production of PC and epoxy resin, the supply gap of bisphenol An expands; on the one hand, the old production capacity of epoxy propane is gradually withdrawn, the supply margin is tight, on the other hand, it benefits from the expansion of polyether and DMC, and the demand is exuberant. We expect all new projects to reach steady-state production and contribute more than 2 billion of profits, achieving a leap in quality.
We will deepen the development of new materials and new energy and enhance the added value of the industry. New materials: 1) 5500 tons of para-aramid has been in trial operation stage, the scale is the first in the country; 2) it has 220,000 pieces / year reverse osmosis membrane production capacity, the later stage will be the layout of degassing membrane and electrodialysis membrane; 3) the acquisition of European ELIX, with a special ABS production capacity of 170,000 tons / year, leading the industry; 4) the acquisition of Fubia, enter the plastic additive business.
In terms of new energy: 1) 10,000 tons of ternary cathode materials are in full-load production, and batch supply has been achieved; 2) the first independently designed passenger car battery system has been measured on the whole vehicle; 3) layout of key links such as battery echelon utilization, fast charging and battery recycling to create a new energy ecosystem.
Focus on new materials, new energy, high performance growth, coverage for the first time, given a "buy" rating. We estimate that the operating income for 2021-2023 will be 570.77 yuan 51.307 billion respectively, and the estimated return net profit for 2021-2023 will be 24.90 pounds 15.97 billion yuan respectively (non-recurring profit and loss for the first half of 2021 will be 1.542 billion yuan, mainly due to the disposal of Yangnong chemical equity), corresponding to PE for 10-16-10, maintaining the buy rating. The 2022 PE is 25X, corresponding to a market value of 39.91 billion yuan, and a six-month target price of 14.43 yuan. Cover for the first time, giving a "buy" rating.
Risk tips: capacity expansion is not as expected, downstream demand is not as expected, and raw material prices are rising.