In 2021, the company achieved a net profit of 2.075 billion yuan, a year-on-year increase of 168.70%. Thanks to the high boom in new energy, the company's core product PVDF and its upstream R142b were in short supply, and prices rose sharply. At the same time, the silicone sector also benefited from the transformation of overseas orders in China. The company plans to continue to expand production, actively layout hydrogen energy business, continue to make efforts in the four aspects of fluorine, silicon, film and hydrogen, and forge ahead and stabilize its leading position in the industry.
We are optimistic about the long-term development layout of the company, taking into account the volume of new capacity, the company's net profit forecast for 2022-23 is increased to 3.842 billion yuan (1.5777 billion yuan), and the net profit for 2024 is forecast to be 4.621 billion yuan. Raise the company's target price to HK $19 and maintain its "buy" rating.
The main products are booming, and the company's performance has increased significantly in 2021. In 2021, the company achieved revenue of 15.847 billion yuan, + 57.48% year-on-year, and net profit of 2.075 billion yuan, a year-on-year increase of 168.70%. In terms of products, the company's revenue from polymer materials, organosilicon, refrigerants and other products respectively achieved 14.50 trillion yuan, which was + 51%, 71%, 62%, 27.88%, 30.3%, 17.41%, and + 14.21/+18.83/+8.24pcts, respectively. Driven by the high boom of new energy vehicles, the company's core product PVDF and its upstream R142b are seriously in short supply in the past 21 years, achieving a significant increase in price and profit. At the same time, the company's organosilicon has also benefited from the high boom brought about by the transfer of overseas orders to China.
The planned production capacity is progressing smoothly, and the business volume is going up to the next level. According to the company announcement, in 2021, the company completed a total of 104 projects, including fluorinated polymer plates, adding 20,000 tons to the first phase of the PTFE project to complete the construction, with a production capacity of 55,000 tons / year, and 5000 tons of FEP project construction with a production capacity of 10,000 tons / year. Organic silicon plate, Dongyue organosilicon 300,000 tons / year organosilicon monomer and 200,000 tons / year organosilicon downstream deep processing project began construction at the end of 2021. In terms of supporting raw materials, the construction of 100000 tons of monochloromethane and 100000 tons of other methane chlorides has been completed in the second half of the year, and trial production is under way; the 30,000 tons of anhydrous hydrofluoric acid and waste acid recovery project continues to progress, and the new 10,000 tons / year PVDF project has obtained all the examination and approval procedures and started construction at the end of the year. With the continuous landing of production capacity, the company's business volume and profitability will be significantly improved.
Hydrogen energy business breaks the monopoly and conforms to the trend of energy development. The development of hydrogen energy is the only way to realize the "double carbon strategy", and fuel cell is an ideal way to utilize hydrogen energy. In the future, Dongyue, a subsidiary, will break the foreign monopoly and achieve a qualitative breakthrough in the field of proton exchange membrane, a key core material for fuel cells. If it enters the stage of mass production, the net interest rate is expected to reach 30%. Dongyue, a subsidiary of hydrogen Energy Co., Ltd., has entered the counseling stage. If the listing is successful, it will broaden the financing channels, further enhance the competitiveness of the industry, and strive to be the first "glory film" in China.
Risk factors: raw material prices fluctuate violently; downstream demand is lower than expected; the company's new production capacity is lower than expected; macroeconomic growth is reduced.
Investment suggestion: the company plans to continue to expand production, actively layout hydrogen energy business, continue to make efforts in the four aspects of fluorine, silicon, film and hydrogen, and forge ahead and stabilize its leading position in the industry. We are optimistic about the company's long-term development layout, taking into account the company's new capacity, the company's net profit forecast for 2022-23 is increased to 3.842 billion yuan (the original forecast is 1.5777 billion yuan), and the net profit for 2024 is forecast to be 4.621 billion yuan.
Raise the company's target price to HK $19 (originally HK $10.20, with reference to the fluorine chemical (CITIC) index corresponding to 2022 15xPE, and give the company a 2022 10xPE taking into account the discount of Hong Kong shares to A shares), maintaining a "buy" rating.