Event: on April 19, the company announced the first quarterly report of 2018, with revenue of 1.607 billion yuan, year-on-year + 4.87%, and net profit of 170 million yuan, compared with + 190%. The year-on-year increase in performance is mainly due to the increase in the price of caustic soda and the increase in investment income.
Caustic soda boom is expected to maintain: in the first quarter, the average price of caustic soda (32% ionic membrane) was 1163 yuan / ton, + 16% compared with the same period last year, and-15% compared with the same period last year. The month-on-month decline is mainly affected by the production limit of alumina downstream in winter, and the price of caustic soda gradually rebounded with the end of downstream production restrictions in March. Affected by the imbalance of chlor-alkali and the pressure of environmental protection, the supply of caustic soda industry is still limited for a long time. According to Baichuan information, liquid chlorine has remained depressed for 18 years, the average price of the factory is close to 0, and the freight rate is 450,1400 yuan / ton. It is expected that the whole year will still be an important factor in suppressing the start of caustic soda. On the whole, the upward fluctuation of caustic soda price is the main theme of 18 years, and the average price of caustic soda in 18 years is expected to be higher than that in 17 years.
Investment income contributes profit: the investment income of the current period is 57 million yuan, which is + 430% compared with the same period last year, accounting for 34% of the net profit. The investment income mainly comes from participating in the expansion MDI projects of Huntsman and Lianheng.
The park integrated industrial chain model, the sales channel is smooth: the company cooperates closely with the international chemical giants to establish an integrated operation mode of equipment matching and pipeline transportation in the chemical zone. The company provides raw material chlorine and caustic soda for the main MDI/TDI/PC of the park, and uses ethylene raw material, secondary chlorine to digest by-product hydrogen chloride gas. The liquid chlorine produced by the company is basically supplied to the downstream of the chemical work area. The mode of park integration reduces the logistics cost and improves the company's ability of long-term stable survival and development. Under the integration mode, the sales channel of the company's products such as liquid chlorine is smooth under the background of the downturn of the industry and the increasing intensity of freight.
The integration of hydrogen chloride / chlorine cycle is expected to achieve comprehensive utilization of by-products: the company uses ethylene as raw material and uses by-product hydrogen chloride to produce dichloroethane, which is a drag on the company's performance. At present, the hydrogen chloride catalytic oxidation to chlorine gas project independently developed by the company is progressing steadily. After the opening, the company will break through the overseas technology monopoly and find a better profit plan for the by-product hydrogen chloride.
Investment suggestion: we estimate that the EPS of the company in 18-20 is 0.91,1.21,1.33 respectively.
Maintain the buy-An investment rating with a 6-month target price of 15 yuan.
Risk hint: the downstream demand of caustic soda is lower than expected, and the demand of liquid chlorine is better than expected.