Events:
The company issued an announcement on the subsidiary Qingdao Huaqing investment in the construction of POE project and UHMWPE project announcement, through the wholly-owned subsidiary Qingdao Chengzhi Huaqing New Materials Co., Ltd. to invest in the construction of POE (polyolefin elastomer) project and UHMWPE project in Dongjiakou Economic Zone of Qingdao West Coast New Zone, with an estimated investment amount of about 4 billion yuan and 800 million yuan respectively.
Comments:
The layout of high-end chemical new materials is expected to open room for growth: at present, two sets of olefin production plants in the company's Nanjing production base have a total production capacity of nearly 1 million tons of ethylene, propylene and butadiene per year; 70% of olefin products are sold directly to the outside world. the company plans to extend to the downstream industrial chain and invest in the field of new materials. The company invests in the construction of POE (polyolefin elastomer) project, the project construction scope includes 2 × 100,000 tons / year POE plant and auxiliary production facilities area and warehouse area, the total investment is expected to be about 4 billion yuan, the construction period is 3 years, and is currently in the early stage of project approval.
As the core barrier of POE production lies in high carbon α-olefins and catalysts, the company plans to introduce technology companies to independently research and develop catalysts, combined with mature polybutene technology, to develop technology and transfer it to foreign countries. In addition, the company invests in the construction of UHMWPE projects, including UHMWPE main units, raw materials and a series of supporting utilities and production auxiliary facilities, with a total investment of about 800 million yuan and a construction period of 3 years. According to the announcement, the development of ultra-high molecular weight polyethylene fiber and composite materials is in line with the national industrial policy, enrich the company's polyolefin product structure, enhance market competitiveness, and is expected to open up growth space.
There is a broad space for photovoltaic and automotive demand, and the POE market has a good prospect: the downstream consumption structure of POE includes TPO terminals, polymer modification, wires and cables, etc. The future photovoltaic field, automotive lightweight and other applications will drive the rapid growth of POE demand. The rapid growth of sales of new energy vehicles in China drives the rapid development of lightweight vehicles. According to the Chinese Society of Automotive Engineering, by 2025, the lightweight level of fuel vehicles in China will be 10% higher than that of 20 years, and the lightweight level of new energy vehicles will be 15% higher than that of 20 years. The application of POE to automobile parts can improve the performance of parts, reduce weight and save cost. In the field of photovoltaic, POE film has better performance than EVA film, which can greatly improve the efficiency of the module; and it is the preferred material for double glass module, which has more advantages than single-sided module. According to CPIA, the penetration rate of double-sided components is expected to increase from 30 per cent in 20 years to 60 per cent in 25 years, and the market share of 60 per cent Poe is expected to continue to increase. The company actively invests in the construction of POE projects to comply with the development trend of new materials in the future.
The rise in raw material prices superimposed the impact of the epidemic, and the 22H1 performance dropped sharply: the company's H1 realized operating income of 6.5 billion yuan in 22 years, + 1.3% of the same period last year, and net profit of 150 million yuan,-80% of the same period last year. In the first half of 22, due to the adverse effects of rising domestic bulk chemical raw material prices, high coal costs and sluggish downstream demand, the company's clean energy business operating costs increased significantly. 22H1's clean energy business gross profit margin of 11.2%, year-on-year-11.43pct It shows that due to the influence of the early epidemic situation, the industry consumes terminal demand ahead of time, resulting in more inventory in the market, and both industry demand and product prices decline. in this context, potential customers are more willing to switch suppliers, and the company seizes the opportunity. Shijiazhuang Chengzhi Yonghua display liquid crystal materials have achieved mass production or specification improvement of a series of high-specification products. The sales of TFT LCD's new projects and new products are proceeding smoothly, and some non-display projects have entered the stage of achievement transformation. 22H1's semiconductor display materials business achieved operating income of 643 million yuan, year-on-year + 17%, gross profit 48.11%, year-on-year + 1.47pct In the life medical sector, on the one hand, due to the rising prices of raw materials and natural gas, the company's D-ribose costs rose; on the other hand, due to large tariffs and surging logistics expenses, the profits of its subsidiary BLS in the United States dropped sharply, resulting in a sharp decline in the profits of the company's life medical sector. 22H1's gross profit margin of the life medical sector was 13.57%, year-on-year-11.18pct.
Profit forecast, valuation and rating: in view of the decline in the company's profitability due to the rising cost of raw materials, we downgrade the company's profit forecast for 2022-2024, and the net profit for 2022-2024 is estimated to be 3.92 billion yuan (down 39%) / 4.38 billion yuan (down 38%) / 4.88 billion yuan (down 39%) respectively, equivalent to 0.31 billion yuan for EPS. The company adheres to the "one body and two wings" strategy and accelerates the laying of new production capacity. We are still optimistic about the company's future development prospects, so we maintain the "buy" rating.
Risk tips: raw material price fluctuation risk, project construction schedule is not as expected, technology iteration risk.