[northeast Securities] Shilong Industry: domestic leading enterprises of AC foaming agent and thionyl chloride

東北證券 ·  03/18/2015  · Researches

Shilong Industry is mainly engaged in the R & D, production and sales of chemical products such as AC blowing agent, thionyl chloride, chlor-alkali and so on. The existing production capacity of AC blowing agent is 60, 000 tons, thionyl chloride is 35000 tons, and caustic soda is 290000 tons. The company is the second largest manufacturer of AC blowing agent and thionyl chloride in China, with high industry status and brand awareness in China. In 2014, the company's operating income and net profit were 1.048 billion yuan and 82.07 million yuan respectively.

The AC blowing agent industry will maintain steady growth. AC foaming agent is widely used in shoes, leather, building materials, home appliances and other industries. With the rising proportion of consumption in emerging areas, AC foaming agent has been used in rubber-plastic thermal insulation materials, automobile interior decoration and other new environmental protection, energy-saving materials industry in recent years, and has a broad market prospect. At present, China is the largest producer of AC blowing agent in the world. By the end of 2013, the output of AC blowing agent in China reached 2354 million tons / year, and the average annual compound growth rate from 2008 to 2013 was 15.30%. Domestic AC blowing agent production capacity is more concentrated, Shilong industrial production capacity has reached 60,000 tons / year, the domestic market share ranks second.

Thionyl chloride returned to growth in 2014. Thionyl chloride is mainly used in traditional industries such as dyes, pharmaceuticals and pesticides. In recent years, the newly developed application fields are sucralose preparation additive industry and lithium battery production process. The domestic market of thionyl chloride has formed a pattern in which backbone enterprises occupy most of the market share and small enterprises are auxiliary. In 2011, due to the influence of underemployment in the dye industry, the sales growth of thionyl chloride industry slowed down. since the second half of 2012, with the recovery of the operating rate of the dye industry, the output of para-ester products, as an important intermediate of reactive dyes, resumed growth. correspondingly, led to the increase in market demand for thionyl chloride. In the first half of 2014, with the recovery of the downstream market, the price of thionyl chloride rebounded sharply and the gross profit margin increased significantly.

The funds raised by the company are mainly used for: 1, annual output of 50, 000 tons of AC blowing agent and its supporting facilities technical renovation project; 2, annual output of 50, 000 tons of thionyl chloride technical renovation and expansion project; 3, repayment of bank loans; 4, supplementary liquidity As some of the previous production lines have been put into production, after the fund-raising project reaches production, the company's production capacity of AC foaming agent will reach 80,000 tons, and thionyl chloride will reach 50,000 tons.

Profit forecast and investment advice: we expect the company to earn 0.86 yuan per share and 0.90 yuan per share in 2015 and 2016, give the company 20-22 times PE in 2015, and the reasonable value of Shilong will be 17.2 yuan / share-18.92 yuan / share after listing.

Risk tips: indigestible new capacity, exchange rate risk, environmental protection and safety risks.

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