The company plans to issue no more than 650 million yuan of convertible bonds to unspecified targets for projects producing 65,000 tons of high-performance rubber additives and by-products recycling per year. 1) The total amount of capital raised in this convertible bond does not exceed 650 million yuan. The conversion period is from the first transaction date six months after the issuance end date to the maturity date of the convertible bond. 2) Part of the capital raised this time was used for a high-performance rubber additive and by-product resource project with an annual output of 650,000 tons. The total investment of the project was 540 million yuan, and the capital raised was 4.6 billion yuan. The company expects to achieve an average annual sales revenue of 813 million yuan and an average annual net profit of 107 million yuan; the remaining 190 million yuan of capital raised this time will be used to supplement working capital. The project has been incorporated into the model.
A new project with an annual output of 40,000 tons of trichlorosilicon to produce 0.65 million tons of silicon tetrachloride and a 10,000 tons/year rubber anti-coking agent CTP project are under construction. A 35,000 ton resin production plant, a 10,000 ton adhesive HMMM production plant and a 20,000 ton/year formaldehyde plant are under construction. Production capacity is progressing steadily. 1) On August 29, 2022, the company announced that it plans to invest 436 million yuan to build a silicon tetrachloride project with an annual output of 40,000 tons of hydrochlorosilicon to produce 0.65 million tons of silicon tetrachloride; the project company expects the construction period of 18 months. 2) On August 20, 2022, the company announced that it plans to invest 137 million yuan to build a 10,000 tons/year rubber anti-coking agent CTP production project; the project is expected to take 21 months. The company expects to achieve annual sales revenue of 300 million yuan, and the company expects to achieve an average annual profit of 52 million yuan. 3) The company invested 188 million yuan in 2021 to build a 35,000 ton resin production plant, a 10,000 ton adhesive HMMM production plant, and a 20,000 ton/year formaldehyde plant; the project company is expected to start production in mid-2023, and is expected to achieve annual sales revenue of 560 million yuan, and the company expects to achieve an average annual profit of 91 million yuan. The project has been incorporated into the model.
The company's core products are in a leading position in the world and continue to develop high-tech green technology. 1) In 2020, the company's anti-coking agents accounted for 65.6% of total domestic production, maintaining a leading edge.
2) The company is the first in China and the third in the world to master continuous insoluble sulfur industrialization technology. The product competitiveness is outstanding. 3) The company's “oxygen oxidation method” accelerator NS production workshop leads the world in terms of cleanliness and environmental protection, greatly reducing “three wastes” emissions. 4) The company has widely deployed tire additives for new energy vehicles, such as silane coupling agents, white carbon black dispersants, high-grade protective waxes, peroxide crosslinkers, etc., some of which have been well marketed. 5) The company's “multi-effect evaporation+composite biochemical method” process efficiently solved the problem of high salt and high COD treatment of rubber additive wastewater. 6) The company has a national rubber additive engineering technology research center to explore cutting-edge fields of rubber additives.
Profit forecasts and reference ratings. Due to the increase in the price of CTP products, we have raised the company's performance.
We expect the company's EPS to be 1.36 (+33%), 1.58 (+22%), and 1.85 yuan (+29%) respectively in 2022-2024. Referring to the valuations of comparable companies in the same industry, we gave 13 times PE for 2023, and the corresponding target price was 20.54 yuan (the original target price was 14.28 yuan, based on 14 times PE in 2022, +44%), maintaining a superior market rating.
Risk warning. The progress of production capacity under construction fell short of expectations, prices of products such as anti-coking agents and accelerators fluctuated greatly, prices of raw materials fluctuated, and the macroeconomic economy declined.