Main points of investment
Domestic well-known private lubricating oil manufacturers. Hi-Tech Petrochemical is one of the earliest private enterprises in China to produce and sell industrial lubricants, mainly engaged in the R & D, production and sales of all kinds of industrial and automotive lubricating oil products. The company's products include transformer oil, hydraulic oil, internal combustion engine oil, gear oil, special solvents, metal processing oil and other 13 categories, more than 200 types of lubricating oil products. The main application fields of the company's products are electric and electrical equipment oil, industrial machinery equipment oil, construction machinery oil, vehicle oil, special solvent and process oil, and other oil.
High-quality lubricating oil will lead to the growth of industry demand. With the gradual advancement of China's industrialization and the change of domestic lubricating oil consumption structure, the proportion of high-quality lubricating oil in the total lubricating oil demand is steadily increasing. In 2005, the demand for high-quality lubricating oil in China accounted for 19.8% of the total demand for lubricating oil, rising to 25.9% in 2014. It is expected that the natural growth rate of the lubricating oil market in the future will be 5-7%, of which the market growth rate of medium and high-grade oil products will be more than 10%. High-quality lubricating oil will drive the growth of industry demand. It is expected that the domestic new lubricating oil production capacity will maintain a growth rate of about 8% in the future, and the industry will maintain a balanced pattern.
Hi-Tech Petrochemical is expected to expand its market share with high-quality products. From the international experience, the quality of lubricating oil is gradually improved in the process of development of lubricating oil industry, and multi-level "green oil" has become the main development direction of international lubricating oil products. We believe that domestic lubricating oil enterprises will also gradually move closer to their international counterparts. Hi-Tech Petrochemical mainly produces high-quality lubricating oil, and the company's technical R & D capability in the field of high-quality products is its core competitiveness. Through independent research and development, the company has obtained 12 patents and mastered a number of core technologies, and the company is still developing 10 R & D projects. Long-term and stable R & D investment and rich technology reserves will not only help to maintain the company's competitive advantage, but also help the company to expand its market share.
The first-mover advantage is expected to help the company continue to grow in mergers and acquisitions. From international experience, shell, Mobil and other international well-known lubricating oil brands gradually expand their business scope, expand production capacity and grow into world-class companies through endogenous R & D and epitaxial mergers and acquisitions. High-tech petrochemical has a first-mover advantage, after years of accumulation, the company has a certain reputation and customer resources in the industry. In addition, the company is so far the only domestic listed company focused on lubricating oil production, with scarcity. With the help of the financing capacity of the capital market, the company is expected to expand its own service areas and achieve continuous growth through continuous mergers and acquisitions.
Risk factors. The macro economy is lower than expected, the demand for lubricating oil is lower than expected, the risk of large fluctuations in international oil prices, and the risk that the fund-raising project is put into production lower than expected.
Profit forecast, valuation and investment rating. The company has a certain reputation in the field of lubricating oil production and processing, and the product quality has been recognized by customers. The high-quality lubricating oil project raised by the company is in line with the development direction of the industry and conforms to the market demand. We expect that the scheduled commissioning of the project will help the company to maintain steady growth in future performance. We estimate that the annual EPS of the company in 15-16-17 will be 0.53 apiece 0.62, respectively, and the current price corresponding to the annual PE of 15-16-17 will be times that of 23-20-17. With reference to the average valuation of other refining and chemical companies, it is given a 16-year 25-fold PE, a target price of 15.50 yuan, and a "buy" rating for the first time.
