Event description
On the evening of November 16, Sinochem International announced that Sinochem Singapore, a subsidiary of Sinochem Singapore, intends to transfer 36% of its shares in Halcyon Agri Corporation Limited (Hesheng Company) to Hainan Natural Rubber Industry Group Co., Ltd. (Hainan Rubber) by private agreement.
Upon completion of the sale, Sinochem's stake in Hesheng will be 29.2%, with a transaction consideration of $0.315 per share.
The non-core business is gradually spun off, focusing on the main business to realize the transformation to a production-oriented enterprise, which is conducive to the company's further focus on the main fine chemical industry and the rational allocation of resources. After the successful completion of the transaction, Hesheng will complete the table. According to the announcement, Hesheng has net assets of US $724.15 million, operating income of US $2.45982 billion and net profit of US $17.05 million in 2021. After the release of the table, the proportion of the company's trade revenue will decrease significantly. With the full production of Lianyungang C3 Industrial Park and the landing of new materials projects one after another, the proportion of the company's main chemical materials industry continues to increase.
In recent years, the company has "added and subtracted" its existing portfolio, constantly optimizing its business portfolio. In terms of "subtraction", Sinochem International has successively withdrawn from non-core businesses such as logistics, agrochemical, and some chemical trade, and this divestiture of non-core, asset-heavy business natural rubber is another major move of the company. In the field of "doing addition", in the field of new materials in the main chemical industry, the company continues to increase its investment in the business of new materials by increasing its shareholding in Yangnong Group, creating an integrated industrial layout of multi-bases and upper and lower industrial chains, and promoting the concentration of resources to the main industry. the company's profit structure continues to be optimized. In recent years, the company has accelerated the adjustment of strategic direction and gradually transformed from traditional trade business to fine chemical production platform. We believe that the value of the company will be revalued by the market.
Capital expenditure continues to grow, and subsequent growth is expected.
In addition, the deal will help reduce the impairment pressure on the company's assets while withdrawing $181 million to support follow-up investments in the rest of the core business.
Lianyungang C3 project is about to be put into production to contribute to the increment of performance. The first phase of Lianyungang C 3 project will be put into production from the end of 2022 to the beginning of 2023, with a total investment of 13.913 billion yuan. After putting into production, it is expected to achieve an average annual operating income of 11 billion yuan and an annual profit of 1.7 billion yuan. The C 3 project strengthens the company's integration chain and forms a closed loop of the industrial chain. In addition, the first phase of the company's follow-up polymer additive project and para-aramid downstream derivative project are expected to contribute to the profit increment for the company.
The counterpoint aramid breaks through the high-mode and high-strength brand, and the advantage of the industrial chain is clear. It is difficult to control para-aramid from equipment to process. In 2021, the global production capacity is only about 120000 tons, which is mainly in the hands of DuPont and Teijin. The company has the maximum production capacity of a single set, accumulating a total of 5500 tons / year, and has broken through the brand of high model and high strength this year to achieve stable supply. In addition, the company's aramid also has the advantage of upstream industrial chain, and the important raw materials of p-aramid, p-phenylenediamine and terephthaloyl chloride, are downstream of the industrial chain of Yangnong Group, and the raw material guarantee advantage is obvious.
Investment suggestion
Under the background of the integration of the two, the company is positioned as an important chemical material pipeline incubation platform for Sinochem Group. With the deepening of the "2percent N" strategy (2 is epoxy resin and polymer additive industry chain, N is specialized special new material products), the company actively promotes the layout of para-aramid, lithium battery cathode materials, nylon 66 and other domestic key materials. We estimate that the company's net profit from 2022 to 2024 will be 16.10,19.84 and 2.746 billion yuan respectively, an increase of-26.0%, 23.2% and 38.4% over the same period last year, corresponding to PE 11.85,12.50 and 9.03 times respectively, maintaining the "buy" rating.
Risk hint
Risks caused by price fluctuations of raw materials and major products
Production safety risk
The project was put into production less than expected.
The macro-economy is declining.