Items:

The company recently released a 17-year performance forecast, with a total net profit of 280 million yuan and 3.4 billion yuan in 17 years, an increase of 14.10% to 38.55% over the same period last year.

Main points of investment

1. The company's new VE production capacity basically reached production in the fourth quarter, benefiting from a substantial increase in product prices.

The price of VE powder rose from 39 yuan / kg in August 17 to 50 yuan / kg at the end of October 17. Since then, with the explosion of the BASF citral plant on October 31, 17, the price of VE powder has continued to rise to 130 yuan / kg in December 17. The company's production capacity of 20,000 tons of VE (oil) has completed climbing in the fourth quarter, with an operating rate of more than 90%, benefiting from a substantial increase in product prices. The impact of the BASF explosion on the company is expected to last at least until April this year, and VE prices are expected to remain high.

Even if there is a correction in product prices in the future, considering that the company adopts self-developed low-cost processes and has low-cost raw materials, its overall cost is expected to be 30% lower than other processes and is expected to remain profitable.

According to the production capacity of 40,000 tons of powder, it is estimated that for every 10 yuan / kg increase in the price of VE powder, the company's EPS will increase by 0.11 yuan.

two。 The reserve of low-cost PPO monomer production technology is expected to become a growth point in the future.

PPO (polyphenylene oxide) is one of the five general engineering plastics in the world. MPPO, which is blended with other plastics, is the most important application downstream. There is a great gap between China and overseas in the technical level of related fields. In 15 years, China has a production capacity of 9900 tons of MPPO, an output of 9200 tons and a consumption of 23000 tons, which needs to be imported in large quantities. The company has completed the process research and development of PPO in 16 years, and the production cost of monomer (2j6-dimethylphenol) can be 30% cheaper than that of its peers, and it has been put into production of 7000 tons of 2jin6-dimethylphenol in 16 years, with a co-production of 3000 tons of o-cresol (used as a pesticide intermediate). The company expects that the project will contribute 150 million yuan in annual income, an increase of 20 million net profit. The company continues to promote PPO product development, which is expected to become an important product supplement for the company in the future.

3. Investment advice:

Considering that the product price is expected to remain high for a long time, we raise the company's profit forecast. It is estimated that the net profit in 17-19 is 3.21,11.58 and 1.663 billion yuan respectively (the original forecast is 2.79,10.99 and 1.578 billion yuan), and the corresponding EPS is 0.12,0.44,0.63 respectively. At present, the stock price corresponds to PE of 40,11,8 times respectively.

4. Risk Tips:

There is something wrong with the operation of the new vitamin E plant; the plastic rice net is unable to meet its performance commitments.