Introduction to this report:
The company has been deeply involved in the LPG deep processing field for many years and has extended its layout to industries such as maleic anhydride and BDO. The light hydrocarbon comprehensive utilization project is progressing in an orderly manner, and it is expected that the company's performance will continue to grow rapidly.
Key points of investment:
Maintain an “increase in holdings” rating. The company specializes in oil additives (isooctane, MTBE), which maintained a high level of prosperity, and its performance continued to grow. Maintain the company's 23-25 EPS at $2.56/2.89/3.20. Referring to comparable companies, the company was given 14 times PE for 23 years, and the target price was maintained at 35.84 yuan.
The 23Q1 results were in line with expectations. The company released a performance forecast. It expects net profit of RMB 1-115 million for 23Q11, an increase of 26.31%-45.26% over the previous year, and an increase of 5.26%-21.05% over the previous month. Net profit after deduction was $0.96-111 million, 24.74%-44.15% year on year, up 5.49%-21.98% month on month. Continued growth in performance is due to an increase in the price and sales volume of the company's main products compared to the previous year; costs were effectively reduced through raw materials and fine management.
Country 6B will go ahead, and oil additive prices may support it. In 2023, China's gasoline will fully enter the national 6B era. Oil products limit the content of olefins and aromatic hydrocarbons in gasoline components. Isooctane and MTBE have become important substitutes for stabilizing the octane value of gasoline. They are ideal additives for finished gasoline products. They have broad market space, and prices may be supported as a result.
The planned projects will be completed and put into operation one after another, and the company will begin a new round of growth. The company plans a comprehensive light hydrocarbon project, which will focus on maleic anhydride and BDO, and comprehensively lay out downstream high-value-added products. Following the 150,000-ton maleic anhydride plant reaching production, the 60,000-ton PBAT project has now been completed and will soon be put into operation. The butanone co-production project of 130,000 tons of ethyl acetate and the BDO project are under construction. The company is located in the Huizhou Daya Bay Refining and Chemical Zone, where low-cost LPG resources further reduce costs. In the long run, the company will benefit from its integrated layout and industry boom development, and the company's growth is certain.
Risk warning: projects under construction fall short of expectations, risk of fluctuations in product volume and price