Core viewpoints
Deep ploughing the gas industry, the performance has increased significantly. Deeply ploughing the gas industry for many years, the company has gradually developed into a leading enterprise in China's food-grade liquid carbon dioxide industry. Upstream for industrial waste gas from large petrochemical enterprises, downstream for large food and beverage customers such as Coca-Cola Company and PepsiCo Inc. At present, the company not only has a liquid carbon dioxide production capacity of 560,000 tons / year, but also distributes combustible gas, hydrogen, hydrogen peroxide and other products, and officially entered the electronic special gas track in 2020 and achieved its first sale in 2021. Under the boom of both traditional carbon dioxide and emerging electronic special gas industries, the company's home net profit increased by 92.3% in 2021 compared with the same period last year.
Carbon dioxide: demand continues to improve and prices are expected to rise. In 2020, carbonated drinks and beer accounted for 90.3% of the demand for food-grade carbon dioxide. From 2017 to 2021, the output of carbonated drinks in China has an average annual compound growth rate of 10.2%. China's beer output in 2021 was 3562.4 kiloliters, an increase of 4.4 percent over the same period last year. As of August 9, 2022, the domestic price of carbon dioxide was 17.5% higher than at the beginning of May.
Electronic special gas: the development of downstream is accelerated, and there is a broad space for domestic substitution. From 2019 to 2021, the average annual compound growth rate of integrated circuit sales in China reached 17.6%. In China's electronic special gas market, foreign-funded enterprises account for a relatively large proportion, and there is a broad space for domestic substitution. At present, the company's special gas products have achieved liquid-air, relevant certification, while the company is promoting ASML Holding NV and other certification. The company's special gas sales increased significantly in 2022, and the company's special gas sales from January to June were 66.078 million yuan, more than double the 19.381 million yuan for the whole of 2021. As of August 9, 2022, the domestic market prices of xenon, krypton and neon have increased by 107.5%, 124.8% and 613.3% respectively compared with the beginning of the year. The rise in special gas prices is expected to enhance the profitability of the company.
The new projects have been steadily advanced to create a closed-loop industrial chain. At present, the company plans to add 800,000 tons of carbon dioxide, 15 sets of electronic special gas and mixed gas devices, 600,000 tons of hydrogen peroxide and 6000 tons of hydrogen per year. In addition, the Baling 90,000 air separation rare gas extraction plant under construction by the company will be self-sufficient in raw gas. With the continuous commissioning of projects under construction, the company is expected to open the second growth curve.
Investment suggestion
With the steady progress of the company's construction projects, combined with the upward trend of the industry business cycle, we expect the company's homing net profit in 2022, 2023, and 2024 to be 2.43, 422, 551 million yuan, respectively, and the corresponding EPS is 0.39, 0.68 and 0.88 yuan, respectively. Taking the closing price of 17.58 yuan on August 9, 2022 as the benchmark, the corresponding PE is 45.14, 25.96 and 19.90 times respectively. Combined with the prosperity of the industry, optimistic about the development of the company.
Cover for the first time and give a "recommended" rating.
Risk hint
Abnormal changes in gas supply, electronic special gas certification is not as expected, capacity construction is not as expected, and so on.