occurrences
The company discloses 2021 annual report and 2022 quarterly report
In 2021, the company achieved operating income of 12.015 billion yuan, +28.70%; realized net profit of 1,638 billion yuan, or +84.79% of the same period; realized net profit of 1,437 billion yuan after deduction, +81.85% year-on-year. The first quarter of 2022 achieved revenue of 2,963 million yuan, +12.68% year-on-year, -18.42%; realized net profit of 278 million yuan, compared to -46.24%, and +39.70% compared to the fourth quarter of 2021; realized net profit of 272 million yuan after deducting non-return home net profit of -272 million yuan, -39.93% year-on-year, and +704.23% from the fourth quarter of 2021.
Brief review
The supply pattern is relatively good, combined with increased exports and steady growth expectations, and enterprises integrating upstream chlor-alkali resources are expected to benefit
The compound growth rate of new PVC production capacity has been less than 5% in the past three years, and the capacity utilization rate has continued to rise. In the future, new production capacity will still be limited due to the balance of double carbon and chlor-alkali. The sharp rise in overseas energy prices this year has led to a stronger spread of chlor-alkali exports than expected. For 22Q1, net domestic exports of liquid alkali were 560,000 tons, +364% year-on-year; exports of solid alkali were 120,000 tons, +35% year-on-year; net PVC exports remained high at 400,000 tons, of which net exports increased 96% month-on-month in March. At the same time, due to the strong downward pressure on the economy, expectations for steady growth in the domestic real estate chain are gradually rising. The main downstream pipes and profiles of PVC, the core product of chlor-alkali, correspond to real estate terminals, and account for more than 50% of demand. The post-real estate cycle is expected to remain resilient, supported by positive policy expectations. Chlor-alkali integrated enterprises with upstream resources, represented by companies, are expected to benefit.
The “electricity-chlor-alkali-cement” circular economy industry chain has been improved, and the Group's chlor-alkali assets will be further injected
Tianwei Chemical and Tianneng Chemical, which are wholly-owned subsidiaries of the company, have 2X330MW and 2X300MW of their own thermal power plants, respectively. Based on this, the company has built a complete “self-supplied electricity → calcium carbide → polyvinyl chloride resin and by-products → calcium carbide slag and other waste to make cement” integrated, green and environmentally friendly circular economy industrial chain, forming an annual output of 890,000 tons of PVC (including 690,000 tons of ordinary PVC, 100,000 tons of special PVC, 100,000 tons of PVC paste), 650,000 tons of ionic film caustic soda, 1.34 million tons of calcium carbide, and 4.05 million tons of calcium slag to produce cement. Within the next 1-2 years, Tianchen Chemical, a subsidiary of the group, is expected to inject 450,000 tons of ordinary PVC, 320,000 tons of caustic soda, and 640,000 tons of calcium carbide.
The sharp rise in PVC and caustic soda in 2021 led to a record high in performance
By product, in 2021, the PVC business revenue was 7.077 billion yuan, +28.14%, and gross margin was 29.81%, +9.16 pct; caustic soda business revenue was 1,072 million, +21.74%, gross margin 27.15% year on year, +8.74 pct; cement and clinker business revenue was 721 million, +9.71% year on year, gross margin was 46.15%, year-on-year, -4.68 pct. The company's cost rate for 2021 was 12.78% (year-on-year -5.84 pct), of which sales, management, finance, and R&D expense ratios changed year-on-year - 5.75pct/-0.12pct/-0.10pct/+0.13pct. The main reason for the sharp decrease in the sales expense ratio was that transportation costs were included in operating costs after accounting policies were adjusted.
2022Q1 was under year-on-year pressure due to a decline in paste resin and a sharp rise in raw materials, but compared to 202Q4, 22Q1 The average price of PVC resin, the company's main product, was 7260.61 yuan/ton, +15.44%; the average price of special PVC resin was 7372.66 yuan/ton, +16.43%; the average price of paste resin was 8539.06 yuan/ton, -48.57%; the average price of caustic soda was 2589.41 yuan/ton, +140.30%; the average price of cement was 3.31 yuan/ton; the average price of cement was 3,331 yuan/ton Tons, -1.26% year on year; the average price of clinker is 233.40 yuan/ton, +23.50% year on year. On the raw materials side, the average purchase price of 22Q1 coal was 399.22 yuan/ton, +66.14%; the average purchase price of coke was 1787.09 yuan/ton, +46.51%. The sharp drop in resin prices on the sales side combined with the sharp rise in raw materials has put pressure on the company's short-term performance, but there has been a significant improvement over the previous year in 2021Q4.
Based on domestic resource endowments, the first phase of the 1 million tons/year synthetic gas low carbon alcohol production project undertaken by Xinjiang Tianye Huihe New Materials Co., Ltd. in which companies in the coal chemical and new materials industry chain participate was put into operation in May 2021. Last year, the subsidiary had a net profit of 104 million yuan. The first phase of the 100,000 tons/year PBAT project undertaken by Donghua Tianye New Materials Co., Ltd. in cooperation with Donghua Engineering, a subsidiary of Sinochem, has been completed and is expected to be put into operation in the first half of the year. At the same time, the company plans to issue convertible bonds to support the wholly-owned subsidiary, Xinjiang Tianye Huixiang New Materials Co., Ltd. to build a production line to produce ethylene from synthetic gas to produce vinyl chloride monomer through ethanol. After completion, the company will have an annual production capacity of 250,000 tons of ethanol and 225,000 tons of VCM monomer, which will help realize the transformation and exploration of the coal-head PVC process under the dual carbon policy.
Profit forecasting and valuation:
The company's net profit from 2022 to 2024 is estimated to be 1,248, 17.42, and 2,036 billion yuan, corresponding to the current stock price PE of 10.0x, 7.1x, and 6.1x, maintaining the “increase in holdings” rating.
Risk warning:
The supply growth rate of the caustic soda and PVC industry exceeded expectations; the Group's chlor-alkali asset injection schedule fell short of expectations.
