The market pattern of epoxy resin continues to improve, and the price rises rapidly. The epoxy resin industry fell into a low ebb after the rapid launch of production capacity in 11-13 years. The continuous high pressure of environmental protection has affected the supply since the middle of 17 years, and the supply and demand pattern of the industry has been significantly improved. The price of epoxy resin rose rapidly from 14000 yuan / ton in July to 28250 yuan / ton at present, and the tracking price difference rose from 4000 yuan / ton to 8000 yuan / ton.
Kunshan environmental protection may affect 30% of the industry's production capacity and may catalyze a rise in resin prices. There will be basically no new production capacity in the industry in the next two years, and we are optimistic that corporate profits will remain high.
Downstream PCB manufacturers expand production on a large scale, and the demand for electronic grade epoxy resin increases greatly. The domestic mainstream PCB manufacturers will expand their production capacity by more than 60% in the next 2-3 years. Driven by automotive electronics and virtual reality, the PCB industry is expected to usher in a new wave of investment. The domestic demand for electronic-grade epoxy resin is expected to grow rapidly from 350000 tons to 500000 tons in the next 2-3 years.
The price of epichlorohydrin and bisphenol A continues to rise, and the cost provides strong support. Under the influence of high pressure of environmental protection and the rise of raw material glycerin, the supply and demand of epichlorohydrin industry is tight, and the price has risen from 8000 yuan / ton in July to 17750 yuan / ton at present. The price of bisphenol A rose more than 30 per cent to 14000 yuan per tonne after the Ministry of Commerce imposed anti-dumping on imports from Thailand in November. The continued strength of the two products is conducive to the high price and price difference of epoxy resin.
Electronic grade epoxy resin leader, fully benefit from rising prices and production capacity. Hongchang currently has a production capacity of 73000 tons of epoxy resin, of which more than 50% are electronic grade epoxy resin, fully benefiting from this round of price increases. The capacity of raising and investing 117000 tons is expected to be mass produced in the first quarter of 18, of which electronic grade epoxy resin accounts for a relatively high proportion. The company is expected to benefit from downstream PCB industry expansion, rapid release of performance. According to the production capacity of 190000 tons next year, for every 1000 yuan / ton increase in epoxy resin price, the company's net profit increases by 138 million yuan and EPS thickens by 0.22 yuan.
Up to "Buy". It is predicted that the net profit of the company in 17-19 is 70 million yuan, 265 million yuan and 405 million yuan respectively, the EPS is 0.11,0.43 yuan and 0.66 yuan respectively, and the corresponding PE is 55 times, 14 times and 9 times respectively. The supply and demand pattern of the beneficiary industry continues to improve, the performance is flexible, and it is upgraded to the "buy" rating.
Risk hint
The risk that the price of the product will fall back and the new capacity will not meet the expectations.
