Support the main points of rating
The performance is in line with expectations. According to the 2021 annual report, the company achieved an operating income of 4.115 billion yuan in 2021, an increase of 77.18 percent over the same period last year. The net profit belonging to shareholders of listed companies was 824 million yuan, an increase of 109.67 percent over the same period last year. Net profit after deducting non-recurrent profits and losses was 818 million yuan, an increase of 114.12 percent over the same period last year. Among them, the operating income in the fourth quarter was 1.047 billion yuan, an increase of 35.71% over the same period last year, and the net profit was 200 million yuan, an increase of 22.53% over the same period last year. The net profit after deducting non-return was 200 million yuan, up 22.22% over the same period last year.
In the first quarter of 2022, the company achieved operating income of 890 million yuan, a decrease of 3.86% over the same period last year, a net profit of 129 million yuan, a decrease of 36.89%, and a net profit of 128 million yuan, a decrease of 36.83% over the same period last year.
The overall price of products has risen, and the price of flame retardants has increased greatly. Due to the gradual relaxation of the control of the global epidemic in 2021, the steady improvement of the domestic economy, and the recovery of market demand for flame retardants downstream cars, electronic appliances and communications equipment, coupled with the introduction of EU halogenated regulations, the price of phosphorus-based flame retardants has risen sharply. In 2021, the average annual price of flame retardant products rose 41.79% compared with the same period last year, the average annual price of amine auxiliaries and catalysts increased by 21.28% year on year, and the average annual price of paint auxiliaries increased by 32.2% year on year. In terms of production and marketing, in 2021, the external sales of flame retardant products increased by 33.13%, the external sales of amine auxiliaries and catalysts increased by 4.03%, and the external sales of paint auxiliaries increased by 97.26%. In the first quarter of 2022, the price of the company's flame retardant products decreased month-on-month affected by the epidemic; the average selling price of flame retardant products in the first quarter was 26619.30 yuan / ton, down 12.29% from the previous quarter. In addition, affected by the epidemic of COVID-19 in East and South China, the downstream demand is weak, and the external sales of flame retardant products decreased by 22.28% in the first quarter compared with the same period last year. We believe that sales of flame retardant products may pick up and profits will improve in the second half of the year.
A number of projects under construction are being carried out as planned. Through years of technological breakthroughs and product expansion, the company's product line has covered five types of phosphorus flame retardants, functional daily chemical additives, amine auxiliaries, catalysts and paint auxiliaries, and various business sectors achieve good coordination. Since 2018, the company has launched a number of new projects. Including "annual output of 48000 tons of high-efficiency and environment-friendly flame retardants, cashew phenol series production project", "annual output of 101500 tons of high-efficiency environment-friendly flame retardants, 44000 tons of cardanol series products technical transformation project", "Jiangsu Taixing plant second phase production project of 27000 tons of aliphatic amine and its derivative products", "annual production project of 319300 tons of functional new materials", etc. This part of the production capacity is expected to be put into production in 2022-2024 to release performance, and the company's revenue scale is expected to continue to increase.
Valuation
Affected by the falling price of flame retardant and the epidemic situation of COVID-19, the profit forecast is lowered. It is estimated that the earnings per share from 2022 to 2024 will be 1.17,1.60,2.47 yuan respectively, and the corresponding PE will be 13.9,10.1,6.5 times respectively. Considering that a number of projects under construction are gradually put into production, the price of flame retardants is expected to pick up after the epidemic and maintain the buying rating.
Main risks faced by rating
The risk of epidemic situation in the location of the company, the risk of postponement of projects under construction, and the price of raw materials fluctuated greatly.
