Summary of the report:
The high growth rate of real estate construction drives downstream demand, and there is almost no new production capacity superimposed inventory removal in the industry. It is optimistic that the soda ash boom will continue, and the company will fully benefit. The soda ash industry has little new production capacity in the next two years, and the completion of real estate construction in 2018 deviates seriously from the new construction, which confirms the logic of the recovery of real estate completion in February 2019. At the same time, Jiangsu Park environmental protection accidents, safety inspection and "Jiangsu Chemical Industry renovation and upgrading Plan" have reversed the market expectations of relaxed environmental protection and loose supply margins.
Double glyphosate bibcock, technical transformation, production expansion and capacity release contribution increment. The company has a nominal production capacity of 150000 tons of double glyphosate and 50,000 tons of glyphosate. The high-pressure start-up of environmental protection in the early stage is a drag on production and marketing, and the company continues to increase production and marketing by increasing investment in environmental protection and supporting capacity expansion: in the first three quarters of 18 years, the nominal operating rate of double glyphosate reached 109%. The actual effective production capacity is close to 170000 tons, and the nominal operating rate of glyphosate is also 109%; the process optimization of the double glyphosate project under construction with an investment of 350 million yuan is expected to further release production capacity and consolidate its leading position.
The commissioning of methionine project in the future will bring new profit growth points. The company will cut into the methionine business and has certain advantages in the supply, cost and some key process links of raw gas: the price of pipeline gas in Sichuan Province is lower than that in other major eastern chemical provinces, and the company's IDA double glyphosate process has accumulated in the natural gas-cyanide industry chain technology. There is a lot of room for domestic import substitution of methionine, and the current price is at the bottom of history; the company's methionine project is expected to be put into production at the end of 19 or early 20.
Company profit forecast and investment rating. The company's concentrated and high investment in environmental protection in the past two years has made the future safe and stable production worry-free, and the labor pains period has passed; the high growth of real estate completion is expected to stimulate the soda boom; the new methionine project and the future production of double glyphosate technological transformation and expansion will bring profit increment. The company's EPS is expected to be 0.064, 0.081 and 0.097 yuan per share respectively from 2018 to 2020, giving a "recommended" rating for the first time.
Risk tips: double glyphosate, methionine project progress is not as expected; alkali, double glyphosate, methionine boom is not as expected; STK profit continues to be less than expected goodwill impairment risk.
