Main points of investment

Polyacrylamide: steady growth of downstream oil production auxiliaries

Due to the dependence of domestic oil production teams on auxiliaries, the company's third production auxiliaries polyacrylamide has been growing steadily.

Judging from the orders announced by the company, it is not expected that the fourth quarter will significantly exceed expectations.

The company's joint venture Bohong chemical project with an annual capacity of 10,000 tons of polyacrylamide is under construction and is expected to make some contribution in 2013.

In addition, the company's cooperation in other major oilfields has been going on.

Acrylamide: double production

-- the company announced in December 2012 that the company plans to spend 18 months and invest 70 million yuan with its own funds, on the basis of the original microbial acrylamide production technology and production capacity, adopt the new multi-stage continuous biological reaction and separation coupling production process independently developed by the company, and implement the technological upgrading project for the continuous production of acrylamide by microorganisms. The production capacity of acrylamide is increased from 40,000 tons / year to 80,000 tons / year.

Acrylamide is the previous process of the company, and doubling its production capacity will help the company to expand its market share of acrylamide. But it mainly depends on the release of downstream demand.

Market development of fracturing fluid and other new products

The company mentioned in its 2011 annual report that "taking advantage of the opportunities brought about by unconventional reservoir production to strengthen the market development of new products such as fracturing fluid" is still being tested.

Profit forecast and valuation

Maintain the company's profit forecast. From 2012 to 2014, the EPS was 74 times, 58 times and 47 times respectively. Considering 1, the rigid growth of the company's three production auxiliaries, 2, the possibility of entering other large oilfields, and 3, the possible breakthrough of the company's fracturing fluid, we maintain the company's overweight rating. At the same time, we will closely monitor the progress of the company in new business areas.