On January 25, 2022, the company issued a performance forecast for 2021. It is expected that during the reporting period, the net profit of 2021Q4 will be 1.70-175 million yuan, an increase of 43.57%, 47.79% over the same period last year, of which the net profit of RMB3245.23-37.4523 million, a decrease of 18%, 29%, and 43%, respectively. It is estimated that the non-parent net profit deducted during the reporting period is RMB 1.68-173 million, an increase of 48.26% Mel 52.66% over the same period last year, of which 2021Q4 deducts the non-home net profit of RMB 3208.54-37.0854 million, a decrease of 9% Mel 21% over the same period last year, and a month-on-month decrease of 35% mi 44%.

On January 25, 2022, the company issued a notice on the signing of a project investment contract between a wholly-owned subsidiary and the management committee of Qingliu Economic Development Zone. The announcement said that Fujian Zhongxin fluorine material Gaobao Technology Co., Ltd., a wholly-owned subsidiary of the company, intends to sign an "Investment contract" with the Management Committee of Qingliu Economic Development Zone in the near future to invest in the construction of a "new electrolyte material construction project with an annual output of 21000 tons". The production lines with an annual output of 10000 tons of sodium hexafluorophosphate, 5000 tons of lithium difluorosulfonimide, 3000 tons of lithium di-trifluoromethylsulfonimide, 2000 tons of trifluoromethyl sulfonyl chloride and 1000 tons of fluoroethylene carbonate will be constructed. the total investment of the project is 370 million yuan.

Comments:

The prices of hydrofluoric acid and sulfuric acid are up, and the technical renovation project is completed to deepen the profit advantage of the fluorine industry chain. In 2021, with the rapid rise of the price of raw material sulfuric acid, the price of hydrofluoric acid also rose rapidly. According to iFind data, the average price of sulfuric acid in China in 2021 was 639.67 yuan / ton, an increase of 316.6% over the same period last year. Q4 the average price of sulfuric acid in China in 2021 was as high as 751.82 yuan / ton, and 205.2% in 2021. The average price of hydrofluoric acid in China was 120,000 yuan / ton, 22.1% higher than the same period last year. Q4 the average price of hydrofluoric acid in China reached 121,000 yuan / ton in 2021, up 55.7% from the same period last year and 25.7% from the previous year. At the same time, with the improvement of downstream demand, the company's hydrofluoric acid product sales increased significantly. At the same time, the product sales of Gaobao Technology, a subsidiary of Gaobao Technology, have also increased, and its annual production of 200000 tons of sulfuric acid has been completed. in addition to sulfuric acid for self-use, the export volume and price of sulfuric acid have increased significantly, which has significantly improved Gaobao's profitability. The rise in the price and volume of sulfuric acid and hydrofluoric acid contributed to a higher performance increment for the company. However, due to the COVID-19 epidemic in Shaoxing City, Zhejiang Province, where the company's main base is located at the end of 2021, the company began to gradually reduce production and stop production in an orderly manner on December 10 to meet the needs of epidemic control. This directly affected the normal production and sales of the company's products in December. However, thanks to the company's continued implementation of fine management to reduce costs and increase efficiency, while speeding up capacity construction and technological innovation, the company's full-year performance is still in line with expectations even under the pressure of epidemic control in December 2021.

Actively layout sodium hexafluorophosphate, LiFSI and other new materials business, fluorine chemical industry in the field of deep technical reserves. Based on the company's technical advantages in the field of fluorine chemical industry, Gaobao Mining, a subsidiary, has built an annual production line of fluorine electrolyte materials such as 10000 tons of sodium hexafluorophosphate and 5000 tons of difluorosulfonimide lithium in Qingliu Economic Development Zone. capacity distribution in new energy businesses such as sodium ion battery electrolytes and new lithium salts. At the same time, the company participated in the sodium ion battery electrolyte project led by Zhejiang Sodium Innovation Energy Co., Ltd. (hereinafter referred to as sodium innovative energy). The company, together with Sodium Innovation Energy, Zhejiang Pharmaceutical and HTC, will take advantage of the patented technology of sodium innovative energy in the field of sodium ion battery electrolyte to build a sodium electrolyte industry project in Hangzhou Bay Fine Chemical Park. Sodium ion battery has good low temperature adaptability, excellent safety performance, relatively low cost, and the production principle is interoperable with lithium ion battery, so its industrial production can directly apply the production chain of lithium ion battery. Superimposed global new energy vehicles and energy storage market are in the stage of rapid growth, sodium ion battery is expected to become a new outlet of the industry as a substitute for lithium-ion battery, and sodium hexafluorophosphate as a solute in the electrolyte of sodium ion battery. can open up room for growth. At the same time, under the demand environment of high energy density and high safety of power battery, the new lithium salt represented by LiFSI, whose physical and chemical performance is better than lithium hexafluorophosphate, is an important direction of development in the future. The company's forward-looking capacity layout in the field of new energy batteries, such as sodium hexafluorophosphate and LiFSI, is expected to open up room for future development.

Fund-raising projects hit the ground to increase sales and promote the company's performance to develop for the better. In 2021, the company's initial public offering to raise funds to invest in the construction of "50 tons of nenoxacin cyclic acid construction project" and "1500 tons of BPEF project" has been successfully completed and put into production. The steady growth of the sales of fund-raising products provides a guarantee for the company's long-term performance. In addition, on August 26, 2021, the company completed its first non-public offering of shares, with a total of 442 million yuan raised by the company to invest in the construction of the project with an annual production capacity of 5000 tons of 4helium-difluorobenzophenone and the expansion project of fluorine fine chemicals series of Fujian Gaobao Mining Co., Ltd., which is expected to be completed and put into production by the end of 2022. While steadily carrying out the business of medical and agricultural intermediates, the company actively expands the fluorine-containing fine chemicals relying on the existing technology, and constantly improves the fine fluorine chemical industry chain to enhance the company's profitability.

Earnings forecast, valuation and rating: the company's full-year results are in line with expectations, in addition, as the new projects have not yet landed, we will not consider the corresponding performance increments for the time being. We maintain the company's profit forecast for 2021-2023 and estimate that the company's net profit for 2021-2023 will be 1.73 million yuan respectively. Thanks to the gradual improvement of the company's fluorine chemical industry chain and the completion of the construction of investment projects, the company will continue to develop and maintain the company's "overweight" rating.

Risk tips: product price fluctuation risk, fund-raising project construction schedule is not as expected, cooperative project landing risk, production safety risk.