Silicone industry leader, layout upstream to further improve the industrial chain. The company has 600,000 tons / year organosilicon monomer production capacity (about 282,000 tons / year of polysiloxane), ranking among the top five in the world, with a domestic market share of 13%.
At present, it has the integrated ability from metal silicon powder processing to organic monomers, intermediates and downstream silicone rubber, silicone oil, fumed silica and other deep processing products, forming a relatively perfect industrial chain, and will actively promote the trial production of 200000 tons / year organosilicon downstream products. The company begins to distribute the upstream raw materials, and when all the planned construction capacity is completed, it will have a supply of 330000 tons of industrial silicon raw materials per year, which can guarantee the demand of 600000 tons of organosilicon monomers.
Overseas capacity contraction & orderly expansion of domestic silicone head enterprises and optimization of supply pattern. Overseas silicone monomer production capacity will further shrink, and the proportion of global production capacity will continue to decline. There are 1 million tons of domestic production capacity under construction + planning, which are concentrated in the head enterprises. it is estimated that the production capacity of silicone methyl monomer in China will exceed 6 million tons per year in 2025, accounting for more than 70% of the global production capacity of silicone methyl monomer. Although there are many plans for new capacity in China, we think that enterprises will comprehensively consider and plan according to the factors of market supply and demand, and the probability of concentrated investment of new capacity is relatively low. The new production capacity will increase the supply of core raw material intermediates, enhance the cost advantage, and further consolidate and enhance the market share and industry position.
Silicone demand still has great potential, with consumption growth expected to grow by 10.9 per cent over the next five years. The largest proportion of domestic silicone consumption is in the fields of construction, electronics and electrical appliances, electric power and new energy, medical treatment and personal care.
In the next five years, in addition to the continuous growth of demand for silicone materials in traditional industries, energy-saving and environmental protection industries such as photovoltaic and new energy, the development of emerging industries such as ultra-high voltage and ultra-high voltage power grid construction, smart wearable materials, 3D printing and 5G all provide a new point of demand growth for silicone. China's polysiloxane consumption is expected to be about 2.1932 million tons in 2025, with an average annual consumption growth rate of 10.9% from 2021 to 2025.
The company has significant scale, cost, R & D advantages, fully benefit from the upward prosperity of the industry. The company has mastered the design and operation technology of 150000 tons / year monomer synthesis plant, which is one of the domestic devices with the highest production capacity, and its production capacity occupies the leading level in China. With the continuous increase in the scale of production capacity, fuel power, direct labor and other costs will be in the same or declining stage. While upgrading and expanding the scope of application of existing products, we will further strengthen the development of new products, including high-end product research and development in national defense, medicine, electronics and other fields. The R & D investment is comparable to that of the new materials company, highlighting the growth attribute of the company. Strong R & D reserves help the company continue to put all kinds of new products into production, and the profitability will continue to be strengthened with the enrichment of new products in the future.
Investment advice: cover for the first time and give a buy rating. According to the assumption, we predict that the company's revenue from 2022 to 2024 will be 7.239 billion yuan, 8.474 billion yuan and 8.58 billion yuan respectively, and the net profit will be 2.277 billion yuan, 2.55 billion yuan and 2.581 billion yuan respectively, the corresponding EPS will be 1.9,2.12yuan and 2.15yuan respectively, and the PE will be 6.38,5.69,5.62times respectively.
Risk hint: the production of the project under construction is not as expected, and the price of chemicals falls.
