1H22 performance is the best in the first half of the year after the establishment of the company, basically in line with our expected 1H22 results: revenue of 10.116 billion yuan, year-on-year + 56.2%; net profit of 1.693 billion yuan, + 180.6%; deduction of 1.714 billion yuan, + 209.35%; earnings per share of 0.75 yuan. 1H22 Dongyue Group ushered in the best half-year results after its establishment, which is basically in line with our expectations.
Trend of development
PVDF and R142b drive significant growth in performance: from a business point of view, 1) fluorinated polymer materials: benefit from the high PVDF boom, segment performance profit 1.149 billion yuan, year-on-year + 178.38% X 2) refrigerant: benefit from R142b high boom, revenue + 70.67%, segment performance profit 354 million yuan, year-on-year + 198.65% 3) silicone: benefit from Dongyue silicon investment project, income + 111.34%, segment performance profit 637 million yuan, year-on-year + 52.42% Bing 4) dichloromethane, PVC and caustic soda: income + 2.08%, segment performance profit 214 million yuan, year-on-year + 2188.01%.
High-intensity capital expenditure continues: 1H22's capital expenditure is 1.616 billion yuan, + 43.26% compared with the same period last year. During the period, the company completed a total of 30 projects. Looking back, the company expects the new 10,000-ton PVDF project to be completed and put into production in October. Combined with the technical transformation of the original production capacity, the PVDF production capacity is expected to reach 25000 tons by the end of the year. The company has accelerated the declaration of the remaining 30,000 tons of projects in the 55000-ton PVDF total capacity planning. In addition, the company has put the expansion plan of R142b, the raw material of PVDF, on the agenda.
Further strengthen R & D efforts: during the reporting period, the company spent 617 million yuan on R & D, an increase of 103.66% over the same period last year. There were a total of 267 R & D projects during the period, including 116 new projects, 85 new products and 42 authorized patents. High-intensity capital expenditure + continue to increase research and development efforts, we believe that the company's future growth momentum is strong.
Profit forecast and valuation
The business cycle of the chemical industry has ushered in a downward phase. We have lowered our profit forecasts for 2022-2023 by 6 per cent and 33 per cent respectively. It is estimated that the EPS will be 1.61 per cent 1.46 yuan respectively, while the current stock price corresponds to 4.5 PE 4.9x for 2022-2023. We believe that the company is expected to become an important supplier of high-end fluorine materials around the world, benefiting from the rise of industries such as lithium and 5G, but due to the decline in risk appetite in the fluorosilicon cycle industry, we have lowered our target price by 25% to HK $12, corresponding to the price-to-earnings ratio of 6.5gamma and 43.4% growth space from 2022 to 2023, maintaining an outperforming industry rating.
Risk
The risk of price fluctuation of fluorosilicon chemicals; the tightening of refrigerant quota, fierce competition in the third-generation refrigerant market; and the development of hydrogen energy industry is not as expected.