Main points of investment:
While the company insists on differential TPU expansion, we believe that the localization of adiponitrile opens the HDI market space, the HDI entry barriers established by HDI technology and phosgene resources are still there, and the HDI project is expected to create the company's second growth curve.
Basic information of the company
The founder team of the company has many years of experience in isocyanate industry, in which the chairman, Mr. Wang Renhong, as the actual controller of the company, holds 53.85% of the company through direct shareholding and indirect shareholding. The company started its business with differentiated TPU. After years of accumulation, it has perfected the industrial chain of special isocyanates such as HDI upstream and opened the second growth curve of the company.
TPU business focuses on differentiation competition, continuous production expansion tamping performance TPU is a kind of polyurethane elastomers, mainly used in shoes, adhesives, pipes, film, etc., 2017-2021 TPU consumption of 6 million tons of CA. GR supply up to 12, .92% 02C1R annual 10 demand for 77%, about domestic TPU manufacturers include Wanhua, Huafeng and other integrated industry leaders, as well as Merrill, Yinowei and other differentiated TPU newcomers.
The market is structurally surplus, and the industry operating rate is only about 55%. In the future, the company will adhere to the route of differentiated TPU and drive steady growth through continuous production expansion (2021 capacity of 85000 tons, which is expected to increase to 285000 tons by the end of 2023).
High-barrier HDI opens the company's second growth curve
HDI is an important curing agent for waterborne polyurethane coatings, which has outstanding properties such as yellowing resistance. at present, the global demand is about 300,000 tons. The localization of adiponitrile is expected to lead to a substantial reduction in the price of hexanediamine, the raw material of HDI, and the reduction of cost is expected to further open the market space of HDI. In the HDI process, the phosgenation of hexanediamine is the core technical link, and because phosgene is a high-risk chemical, the project approval of phosgene has also become an important policy barrier for HDI production expansion, currently HDI supply is monopolized in the hands of traditional MDI giants, and Meirui new materials plan to build a 120000-ton special isocyanate integration project in Hebi, Henan Province, which is expected to break the HDI supply monopoly and drive its own performance center to a higher level.
Earnings forecast, valuation and rating
We estimate that in 2022-24, the company's income will be 18x27 / 5.3 billion yuan, yoy will be + 38% CAGR 50% / + 99%, net profit will be 1.47 pm 2.13 / 596 million yuan, yoy will be + 24% yoy 45% / + 180% CAGR 2.98 yuan, 3-year EPS is 71%. The growth of production and sales of TPU leads to the improvement of the performance of the traditional main industry, and the HDI project is expected to lead the company's performance to a higher level in 2024. In view of the fact that the company has a significant performance growth compared to comparable companies, we give the company 20 times PE in 24 years, corresponding to the target price of 59.60 yuan in 2024 and 80.54 times of PE in 2022, covering for the first time and giving "buy" rating.
Risk hint: the risk of HDI project construction, the risk that profitability is lower than expected; the risk of production safety.