The company is an established high-tech enterprise in the field of fine chemicals: it has been committed to developing new material products to improve the surface properties, non-flammability and softening properties of materials. After years of development, the company's main business has expanded from the initial polyether modified silicone oil to the fields of surfactant, flame retardant and silicone rubber. Since 2021, thanks to the gradual release of new production capacity, the improvement of the supply and demand structure of the industry and the cost support brought by the rising prices of upstream raw materials, the company's performance has reached a higher level. In the first three quarters of 2021, the operating income was 935 million yuan, an increase of 50.93% over the same period last year, and the net profit was 123 million yuan, an increase of 28.39% over the same period last year.
Polyetheramine: domestic substitution under tight supply and demand. 1) the gap between supply and demand drives prices higher: thanks to the high prosperity in downstream wind power blades, construction, shale gas exploitation and other areas, demand continues to develop at a high speed, and the global production planning for new capacity does not match the growth rate of demand. we think that supply and demand will be tight in the next two years. 2) the timing of domestic substitution in the field of wind power: overseas polyetheramine production capacity is under pressure, domestic wind power blades and special epoxy resin are gradually deepened, and domestic substitution of polyetheramine will be accelerated; 3) production capacity is spear. planning for the future production capacity of the national leader: the company's current design capacity of 31000 tons, has ranked second in the country and fourth in the world. In the future, it will also put into production 40,000 tons of polyether amine and 42000 tons of polyether project, which is expected to gradually become the national leader and the world's leading polyether amine manufacturer. 4) cost as the shield, integration to improve profitability: the company's existing and planned capacity of polyether amine are equipped with sufficient polyether polyols to achieve complete polyether self-sufficiency, and polyether production capacity is given priority to the needs of polyether amine production, so that polyetheramine product chain is more resilient, as far as possible to reduce the risk caused by insufficient supply of upstream materials or rising prices in the future.
Flame retardant plate: the company's flame retardant plate is mainly engaged in phosphorus series flame retardants for polyurethane, with a design capacity of 34800 tons, which is in the forefront of the country. The demand for polyurethane phosphorus flame retardants has steadily increased due to the prosperity and upgrading of the downstream polyurethane industry, but since 2020, three companies with a total production capacity of about 80,000 tons have been ordered to shut down by the local government, and some manufacturers who are not in the chemical park may be shut down in the future. Considering that it will take 2-3 years for the new production capacity to reach a stable supply, it is expected that the industry structure of TCPP will evolve from the balance of supply and demand to the tension of supply and demand in the next 1-2 years, and the growing relationship between supply and demand will drive the profitability of polyurethane phosphorus series flame retardants up.
Profit forecast: the company is expected to achieve operating income of 1.378 billion yuan, 1.877 billion yuan and 2.073 billion yuan respectively from 2021 to 2023, and realize net profit of 161 million yuan, 296 million yuan and 367 million yuan respectively, an increase of 17.21%, 84.06% and 23.80% over the same period last year. The corresponding EPS is 1.07,1.97,2.43 respectively, and the current share price (closing price on February 11, 2022) corresponds to PE multiples of 18X, 10X and 8X, respectively.
Risk tips: product production and marketing risk, raw material price rise risk, downstream demand lower than expected risk, industry competition intensified risk, product export hindrance risk, production expansion of projects under construction is not as expected, and other risks.
