What happened: the company released its third-quarter report for 2021. In the first three quarters of 2021, the company achieved revenue of 4.988 billion yuan, + 27.51% compared with the same period last year, and net profit of 193 million yuan,-36.72% compared with the same period last year. Among them, 2021Q3 achieved operating income of 1.871 billion yuan, month-on-month ratio of + 7.9%, year-on-year + 20.19%; net profit of 110 million yuan, month-on-month ratio of + 239.72%, year-on-year-33.04%.
Downstream demand warms up to promote revenue growth, raw material costs upward compression of profit space. Benefiting from the pick-up in downstream demand, 21Q3's main product polycarboxylic acid superplasticizer polyether monomer sales year-on-year + 26%, sales revenue + 24% year-on-year. However, due to the decline in international crude oil inventories and market concerns about tight supply, international oil prices rose sharply, and the purchase cost of ethylene, the company's main raw material, increased by about 33% compared with the same period last year. In addition, Jiangsu Oak Chemical, a wholly owned subsidiary of the company, expanded and renovated the production plant and overhauled the production plant, resulting in a corresponding increase in costs, and the comprehensive gross profit of subsidiary products decreased by about 6pct in the first three quarters of 2021.
Lithium power business continues to be booming and continues to promote collaborative layout. The company's "annual output of 20,000 tons of new energy lithium battery electrolyte solvent project" was put into production in October 2020, and the battery-grade products have been shipped in batch. In the first three quarters of 2021, the company sold about 18000 tons of electrolyte solvents for lithium batteries, with a gross profit margin of about 35%. Among them, the sales volume of 21Q3 was 4500 tons, with a month-on-month ratio of + 2.3%, and the gross profit was slightly higher than that of Q2. At the same time, the company participates in 35% of Suzhou Huayi, and Suzhou Huayi plans to invest 1 billion yuan to build 116500 tons of additives and electrolytes in Dalian in three phases. Collaborative layout is expected to further enhance the strength of the company's industrial chain and thicken the company's performance.
Layout of 50,000 tons of EC and derivative solvent materials projects to enhance the influence of lithium industry. The company announced on September 22 that it intends to invest in the construction of Oak's western headquarters and the comprehensive utilization of carbon dioxide. The company and Shenzhen Yanyi will set up Sichuan Oke Lithium Electric New Materials Co., Ltd. as the main body of the carbon dioxide comprehensive utilization project with a proportion of 90% and 10% respectively. The project is divided into two phases. The first phase of the project is intended to use industrial tail gas of Sichuan Petrochemical Corporation (about 257,000 tons / year) and ethylene oxide (about 25,000 tons / year). Build a plant with an annual output of 50, 000 tons of vinyl carbonate (EC), 32400 tons of dimethyl carbonate (DMC), 15000 tons of methyl ethyl carbonate (EMC), 2075 tons of diethyl carbonate (DEC), and 20300 tons of polyester ethylene glycol. After the completion of the project is expected to further enhance the company's influence in the lithium industry chain.
Earnings forecast, valuation and rating: due to the rise in crude oil prices, the company's rising raw material costs performance is temporarily under pressure.
The company has a number of capacity construction in the field of new energy electrolyte. With the strong demand of the downstream new energy industry, the overall growth space of the company will still be significantly expanded. We downgrade the company's profit forecast for 2021, maintain the company's profit forecast for 2022, and add the company's profit forecast for 2023. It is estimated that the 2021-2023 net profit of the company will be 3.29 (down 33.3%) / 558,935 million respectively. We are still optimistic about the development of the company's electrolyte business and maintain its "buy" rating.
Risk tips: raw material price fluctuation risk, lower-than-expected demand, capacity construction risk.