I. Overview of events
Recently, the company issued an announcement to sign five contracts for the design, procurement and construction (EPC) general contract of the Guangdong Refining and Chemical Integration Project, a joint venture between China and Science and Technology, with a contract price of RMB 632944949 (including tax). At the same time, according to the announcement on the website of the Jieyang government, the 20 million-ton refining and chemical integration project of Petrochina Company Limited Jieyang has officially resumed work, and it is expected that some of the refineries will be put into commissioning in October and the chemical industry in December.
II. Analysis and judgment
The newly signed contract + the order on hand is sufficient, and the performance is on the rise.
The Hengyi petrochemical Brunei general contract project currently being implemented by the company is expected to be put into production by the end of 18, with a contract value of 390 million; the newly signed Guangdong refining and chemical integration project always includes a tax of 633 million, and the implementation time is about 2 years; Petrochina Company Limited Jieyang 20 million tons refining and chemical integration project officially resumed work, the project won the contract amount of 1.3 billion. At the same time, as one of the seven refining and chemical integrated petrochemical bases in the national 13th five-year Plan, the Zhenhai Refining and Chemical Industry 15 million ton Refining + 1.2 million ton Ethylene Project is expected to be started. as the former design institute of Zhenhai Refining and Chemical Industry, the company has an inherent advantage in obtaining project orders. In the future, with the implementation of on-hand orders and the continuous acquisition of new projects, the company's performance will enter a steady upward period.
Large-scale refining and chemical projects have entered the construction peak, and the engineering design industry is the first to benefit.
In the next five years, China will have a number of large-scale refining and chemical projects to start construction, of which, according to the national development plan, China will build seven major refining and chemical industry bases during the 13th five-year Plan period; China Petroleum & Chemical will invest 200 billion yuan to build four major refining and chemical bases Petrochina Company Limited Central Committee restarted the Jieyang 20 million-ton oil refining project, the construction of the 15 million-ton Panjin refining and chemical project of the Arms Group, and the reconstruction and expansion of the production capacity of some existing enterprises. China's new oil refining capacity will be about 200 million tons in the next three to five years, accounting for 26.7% of the existing production capacity. The demand for engineering design is greatly increased by the centralized construction of large-scale refining and chemical projects. As an excellent domestic engineering company, with China Petroleum & Chemical background, complete design qualification and rich engineering construction experience, the company will significantly benefit from the investment and construction of large-scale domestic refining and chemical projects.
The deterioration of imported crude oil promotes the great demand of hydrogenation unit and sulfur recovery unit.
The company is one of the few domestic companies with large-scale sulfur recovery technology and independent intellectual property rights. the total number of large-scale sulfur recovery units designed or contracted by the company is about 30, nearly half of which are super-large sulfur recovery units with a single series of more than 100,000 tons per year, with a total sulfur treatment capacity of more than 2 million tons per year. The ZHSR domestic large-scale sulfur recovery technology independently developed by the company has a sulfur recovery rate of more than 99.98%, reaching the international advanced level. As China's external dependence on crude oil is close to 70%, in order to maximize benefits under high oil prices, most refiners mainly import inferior crude oil containing sulfur or high sulfur. This requires that new refinery capacity and stock capacity transformation must be equipped with more hydrogenation units to match changes in crude oil quality. At the same time, the sulfur recovery unit must be upgraded accordingly, requiring larger scale and higher efficiency to meet the more and more stringent environmental protection requirements. Therefore, the demand for hydrogenation unit and sulfur recovery unit will further increase in the future, and the company has a competitive advantage in project acquisition relying on advanced self-owned technology.
Third, profit forecast and investment suggestions
The company's net profit from 2017 to 2019 is expected to be 47 million, 143 million and 192 million respectively; EPS is 0.35,1.08,1.44 yuan respectively; corresponding to PE is 75 times, 25 times, 18 times, maintaining a "highly recommended" rating.
Fourth, risk tips:
The uncertainty risk of the general contract project; there is a risk of delay or even cancellation in the implementation of the project.