Event

The company issues its 2022 half-yearly report. In the first half of 2022, the company achieved operating income of 3.667 billion yuan, an increase of 22.4% over the same period last year, and a net profit of 886 million yuan, an increase of 33.0% over the same period last year.

Comment

The increase in performance was mainly due to an increase in sales of major products and higher prices. First of all, in the first half of 2022, the sales of the company's main products increased significantly. The sales of PVC, caustic soda and chlorine products were 2.85,35.97 and 669500 tons respectively, up 142.35%, 6.08% and 6.04% respectively over the same period last year.

Secondly, the prices of most of the company's main products increased, with the prices of PVC, caustic soda and chlorine products rising by 55.80% and 20.07% respectively, except that the price of PVC decreased slightly by 6.65% year-on-year.

Consolidate Shanghai's "main war zone" and open up a "new base" in Guangxi. First of all, Shanghai Chemical Zone is the main war zone of the company's industrial layout. With the landing of 200,000 t / a vinyl chloride project and special resin promotion and transformation project, the company realizes the regional linkage between Huasheng and Tianyuan, further improves the HCl-EDC-VCM- special PVC industrial chain, optimizes product structure, and enhances risk resistance. Qinzhou, Guangxi is the company's "new base". After Qinzhou's 300,000 tons / year caustic soda and 400,000 tons / year PVC project is put into production at the end of 2022, the company's industrial chain will be further extended to help open up the South China market.

Supply and demand are tight, the price of caustic soda is expected to remain high, and the company's profitability continues to improve. On the supply side, under the "double carbon" goal, caustic soda to speed up the clearance of existing capacity and strict control of new capacity is the main trend, so it may be difficult for the supply side to have a significant increase. In terms of demand, alumina is the main application direction of caustic soda, accounting for 30%. As of July 2022, alumina production capacity was 96.7 million tons, an increase of 8.4% over the same period last year. The increase in alumina production capacity will boost caustic soda demand, and the current alumina plant and market inventory are in a low position. Under the traditional aluminum consumption peak season of "Jinjiu Silver Ten", alumina has strong demand recovery and inventory replenishment expectations, thus providing support for caustic soda prices.

Investment suggestion

We maintain the profit forecast in the original report. Based on the closing price on August 30, it is expected that the EPS of 2022 and 2023 will be 1.77 and 2.63 respectively, and the corresponding PE will be 3.74 times of 4.33 in 2024. Combined with the high prosperity of the industry and the release of the company's future production capacity, we are optimistic about the development of the company. Maintain the "highly recommended" rating.

Risk hint

The price of caustic soda fluctuates abnormally, the domestic epidemic situation is repeated, the production of the company's project is blocked, and so on.