Incidents:
On November 16, 2022, the company announced that Sinochem International (Singapore) Co., Ltd., a wholly-owned subsidiary, intends to transfer 574 million common shares held by Halcyon Agri Corporation Limited (hereinafter referred to as “Hesheng Company”) to Hainan Natural Rubber Industry Group Co., Ltd. through a private agreement transfer (accounting for about 36.00% of the issued and paid up share capital of Hesheng Company before this transaction). The transaction price of the underlying asset was determined to be US$181 million. The transaction consideration was US$0.315 million per share After the transaction is completed, Sinochem's newly held share ratio of Hesheng Company will be 29.2%.
Comments:
Sell the natural rubber business, focusing on the new chemical materials industry. The main business of Hesheng Company sold by the company this time is the cultivation, processing and sale of natural rubber. After the transaction is completed, Sinochem's share ratio of Hesheng Company will be 29.2%, and it will no longer be a subsidiary within the scope of the consolidated statement.
In the first half of 2022, Hesheng Company achieved consolidated revenue of 8.419 billion yuan and consolidated net profit of 5,5682 million yuan. After the sale of the natural rubber business is completed, it is expected that there will be little impact on the company's performance. At the same time, it will help the company concentrate resources to focus on the development of the new chemical materials industry, continue to extend, repair and strengthen the chain, gradually forming multiple industrial chains with leading international or domestic positions, providing the company with more growth and increased performance.
The “Carbon 3” project is expected to be fully completed in the first quarter of next year, and high-performance materials such as nylon 66 will develop rapidly. According to the company's announcement, the first phase of the carbon industry project plans to invest in 600,000 tons of propane dehydrogenation, 650,000 tons of phenol acetone, 240,000 tons of bisphenol A, 400,000 tons of propane oxide, and 150,000 tons of propane chloride per year. According to the company's recent announcement and exchange minutes, up to now, four sets of ECH, epoxy resin, ionic caustic soda, and hydrogen peroxide devices have been put into operation. It is expected that the “Carbon 3” project will be fully completed in the first quarter of next year, and the annual capacity utilization rate can reach 60-70% of the design capacity. Furthermore, Ningxia Ruitai's 40,000 tons/year nylon 66 and 25,000 tons/year hexadiamine units have begun to be profitable in September. It is expected that after the project reaches delivery, the company's nylon production capacity of 66 tons will further expand to 80,000 tons in 2023, the future will Seize western energy advantages and intermediate technology to further improve the industrial layout.
Maintain buy ratings. The company is expected to achieve net profit of 15.97/25.47/3.130 billion yuan in 2022-2024. The corresponding PE is 12X/7X/6X respectively, maintaining the “buy” rating.
Risk warning: Demand is falling, and capacity expansion falls short of expectations.