Brief comment

Fluorine chemical integration enterprise, endogenesis + epitaxy to build the whole industry chain

Founded in 2000, the company focused on the R & D and production of pharmaceutical and pesticide intermediates in the early stage, and continuously expanded its category through the accumulation and evolution of core technology. at present, it has formed a series of intermediate products with the third and fourth generation quinolone anti-infective drugs and pyrethroid pesticides as the main application. In 2017, the company gradually extended to BPEF and DFBP through raising funds, entered the field of optical resin, special engineering plastic new materials, and had a layout in supercapacitors and new energy materials; in 2019, the company acquired Gaobao technology and its subsidiary Changxing fluorite, locking fluorite scarce resources, helping to stabilize cost fluctuations and provide strategic support for the company's fluorine fine chemical development.

By the end of 2021, the company has a production capacity of 40,000 tons of anhydrous hydrofluoric acid, 3000 tons of acetophenone, 2020 tons of tetrafluorobenzene, BMMI500 tons, 1765 tons of tetrafluorobenzene, 1200 tons of N-methylpiperazine, BPEF1500 tons, 200000 tons of sulfuric acid, and the coordinated development of basic fluorine chemical, pharmaceutical, pesticide and new materials business.

Constantly expand production capacity, transform and upgrade to new materials

The company will release a fixed increase at the end of 2020 to build a new production capacity of 5000 tons of 4504mm PEEK to be used to synthesize special engineering plastics. There is also Gaobao Technology's fluorine fine chemicals expansion project, including 20, 000 tons of fluorobenzene, 3000 tons of 4-fluorobenzoyl chloride, 53000 tons of high-purity potassium fluoride, 14000 tons of high-purity sodium fluoride, and 30, 000 tons of anhydrous hydrofluoric acid. to provide raw material support for the company's fund-raising projects and existing business, both of the above two projects were approved by EIA in 2021 and are expected to enter the trial production phase in January 2023. In addition, the company has "300t 3pd4-difluorobenzonitrile and 500t p-fluoronitrobenzene project" and "fluorite mining expansion project". After the completion of the project, the company's fluorite mineral capacity will be expanded to 80,000 tons; in June 2022, the company announced the "1420 tons of fluorine fine chemicals and 5200 tons optoelectronic materials project" environmental assessment, which will contribute 995 million yuan in annual income and 276 million yuan in annual profit. In addition, the subsidiary Gaobao Technology will build a "21000 ton new electrolyte material project" (including 10,000 tons of sodium hexafluorophosphate) and a "30,000 ton photovoltaic grade hydrofluoric acid project" to further deepen the layout in lithium electricity, new energy and other fields. it is expected to open up the growth space of the company and contribute to the increment of performance.

The acquisition of Jiangxi Exxon has a broad prospect of entering the fourth generation of refrigerants.

On July 20, 2022, the company announced that it had completed the acquisition of 51% of Jiangxi Exxon by means of equity transfer and cash capital increase of 357 million yuan. the target company is mainly engaged in the production and sales of HFCs products, and has built pentafluoropropane (HFC-245fa) and tetrafluoroethane (HFC-134a) production capacity. In May 2022, Jiangxi Exxon "5000 tons of R1234ze, 10,000 tons of R1233zd, 10,000 tons of R134a project" was approved by environmental assessment, in which R1234ze and R1233zd are the fourth generation refrigerants, the company will enter the fourth generation refrigerant field and will have a fourth generation refrigerant capacity of 15000 tons after it is put into production.

From the point of view of product generation, although the third generation refrigerant has no obvious destructive effect on the ozone layer, it will still cause global warming. The fourth generation refrigerant HFOs has zero ODP (ozone depletion potential) and very low GWP value (global warming potential), so it is an excellent substitute for the third generation. From the point of view of the development trend, the third-generation refrigerants have entered the initial phase of phase-out abroad: according to the Montreal Protocol in 2016, the consumption of third-generation refrigerants in developed countries will be reduced by 5% by 10% in 2019 and gradually increased to 85%. In developing countries, the use of third-generation refrigerants will be reduced by 10% from 2029 to 2032 and gradually increased to 85%. Fourth-generation refrigerants are imperative. China will freeze the use of third-generation refrigerants in 2024. At present, NIO Inc. and Volvo have announced that they will switch to the fourth-generation refrigerants in automotive air conditioners. From the point of view of the supply pattern, at present, the international giants Comu, Honeywell International Inc and Akoma have all set up factories in China, and only a few domestic enterprises such as Juhua (Honeywell International Inc OEM) have fourth-generation refrigerant production capacity and high barriers to product development / production. the industry has broad prospects.

Profit forecast and valuation: the company has a large number of new projects, making efforts in the field of upstream resources and new energy and new materials at the same time, and has huge room for growth. It is estimated that the company's return net profit from 2022 to 2024 is 2.09,4.55 and 608 million yuan respectively, corresponding to PE of 32.1X, 14.8X and 11.1X respectively, covering for the first time and giving a "buy" rating.

Risk Tips:

Raw material prices fluctuate; downstream demand falls short of expectations; industry competition intensifies; project production falls short of expectations.