Event

Chenghua shares released its semi-annual report for 2022: 2022H1 realized operating income of 596 million yuan, down 5.44% from the same period last year. The net profit belonging to shareholders of listed companies was 90.21 million yuan, an increase of 3.61% over the same period last year. The operating income of 2022Q2 was 323 million yuan, down 0.84% from the same period last year. The net profit belonging to shareholders of listed companies was about 48.9 million yuan, an increase of 33.18% over the same period last year. Basic earnings per share is 0.43 yuan.

Main points of investment

The production capacity of the main products was resumed and the results were repaired in the second quarter compared with the previous quarter.

2022Q2 realized a net profit of 48.9 million yuan belonging to shareholders of listed companies, an increase of 33.18% over the same period last year and 19.5% month-on-month, with quarterly profits repaired. The main products polyetheramine, according to Baichuan Yingfu, 2022Q1 and 2022Q2 polyetheramine average price is 41133 yuan / ton and 36593 yuan / ton, although the price dropped somewhat in the second quarter, but still higher than last year's average price. According to the company announcement, all Huaian Chenghua production lines will resume production in a comprehensive and orderly manner from April 28, including 22700 tons of polyether project, 10, 000 tons of polyether amine project and 20, 000 tons of flame retardant project. In the first half of this year, due to the prevention and control of the epidemic caused by the temporary suspension of production line in the first quarter, the company's performance declined. In the second quarter, the company's business operations remained stable, production capacity gradually returned to contribute to the main performance growth.

The demand for wind power is growing rapidly, and the contradiction between supply and demand of polyetheramine is prominent.

Supply and demand gap, polyetheramine may enter a golden period of development. Under the background of carbon neutrality, global wind power has ushered in great development opportunities, and the installed capacity of wind power is expected to continue to rise. The demand for wind power blades continues to release, which directly drives the high growth of the demand for polyetheramine. Polyetheramine, by contrast, has only a small amount of capacity released over the next two years. The prosperity of polyetheramine is expected to continue to improve. It is worth noting that the domestic wind power installed or concentrated release in the second half of 2022, the contradiction between supply and demand of polyetheramine is particularly prominent.

The production capacity of polyetheramine is put into production, and its growth is expected in the future.

Up to now, the company has a design capacity of 31000 tons (3000 tons under construction), ranking second in the country and fourth in the world. In the future, it will also put into production 40, 000 tons of polyether amine and 42000 tons of polyether projects. The new production capacity will continue to be put into use in the future, and the company can grow.

Profit forecast

The forecast company's income from 2022 to 2024 is 16.10,21.27,2.829 billion yuan respectively, and the EPS is 1.73,2.24,2.68 yuan respectively. The current stock price corresponds to PE 10.5,8.1,6.8 times respectively, maintaining the "buy" investment rating.

Risk hint

The economic boom is declining, the polyetheramine industry has greatly expanded production, shareholders have reduced their holdings significantly, the performance has fallen below expectations, the company's product prices have fallen sharply, the risk of substantial fluctuations in raw material prices, and the schedule of production capacity has fallen short of expectations.