Event: according to the company's first-quarter report in 2022, Q1 achieved an operating income of 10.69 billion yuan in 2022, a year-on-year income of + 38%, a month-on-month profit of-22%, and a net profit of 284 million yuan,-45% and-24%, respectively.
Comments:
Refinery gross profit is under pressure, 22Q1 performance decline: in 2022 Q1 company's main products polyethylene average price is 8903 yuan / ton, year-on-year + 7%, month-on-month ratio-2%; urea average price is 2733 yuan / ton, year-on-year + 32%, month-on-month ratio + 1%; diesel price is 7775 yuan / ton, year-on-year + 40%, month-on-month ratio + 2%; polypropylene average price is 8613 yuan / ton, year-on-year-1%, month-on-month ratio-1%. The price of the company's main products rose year-on-year, leading to a substantial increase in Q1 revenue in 22 years. The average price of Q1 Brent crude oil futures in 2022 was 98.0 US dollars per barrel, which once broke through the 100 yuan per barrel mark. The sharp rise in oil prices put pressure on the company's refining and chemical gross profit, resulting in a decline in Q1 performance in 22 years.
Urea prices continue to rise, the company is expected to continue to benefit: since the beginning of 22, domestic urea prices have continued to rise, as of April 27, urea prices have risen to 2989 yuan / ton, up 17% from the beginning of the year. According to Baichuan Yingfu, the gross profit of domestic coal head urea and gas head urea is 647 yuan / ton and 876 yuan / ton respectively, up 92% and 83% compared with the beginning of the year. Domestic urea profitability is significantly improved, and the profitability of gas urea is higher. With the completion and commissioning of Xinjiang Chemical Fertilizer Petrochina Company Limited Gas Pipeline Project in 2021, the company now has a gas urea production capacity of 1.32 million tons and a long-term supply of natural gas, and the company is expected to continue to benefit from rising urea prices. With the start of spring ploughing fertilizer in China, the demand for urea is expected to continue to grow, and the prosperity of the industry is expected to continue.
Together with Saudi Aramco, the group's refining and chemical project is expected to move forward rapidly: the project has a crude oil processing capacity of 300,000 barrels per day (equivalent to 1500 million tons per year) and is expected to be put into operation in 2024. In addition, Saudi Aramco will provide up to 210,000 barrels per day (equivalent to about 1000 million tons / year) of crude oil for the project to ensure the supply of crude oil for the project. Huajin shares, as the only petrochemical listed company under China Arms Industry Group and one of the domestic super-large oil refining and chemical integrated comprehensive petrochemical enterprises, has obvious production scale advantages and vertical integration advantages. The Saudi Aramco Refining and Chemical Integration Project is owned by North Huajin Chemical Group, a controlling subsidiary of the group, and Huajin is expected to participate in the construction of the project in due course. At that time, the competitiveness of the company's petrochemical and fine chemical sectors will be significantly enhanced.
Profit forecast, valuation and rating: in view of the sharp rise in oil prices, the company is under pressure as a refining and chemical enterprise. in addition, spring ploughing has not been fully started in Northeast China due to the epidemic, so we do not consider the elasticity of urea performance for the time being. therefore, out of careful consideration, we lowered the company's profit forecast for 2022-2023 and added the profit forecast for 2024. It is estimated that the company's net profit in 2022-2024 is 9.15 yuan (down 11%) / 10.84 yuan (down 7%) / 1.222 billion yuan respectively, corresponding to an EPS of 0.57 0.68 pounds per share respectively. As of April 26, 2022, the company's PB-MRQ is only 0.65 and the valuation is in the bottom range, the company is expected to continue to benefit from the high boom in the urea industry, and the group's refining and chemical projects are progressing smoothly, we are still optimistic about the future development of the company, so we maintain our "buy" rating.
Risk hint: the risk of fluctuations in raw material prices, and the schedule of new capacity is not as good as expected.