Main points of investment:
The leader of chlor-alkali industry in Inner Mongolia. As a leading enterprise in chlor-alkali chemical industry in Inner Mongolia, the company has a production capacity of 700000 tons of PVC, 480000 tons of caustic soda and 300000 tons of ferrosilicon. On January 4, 2017, the company announced that the prices of PVC and caustic soda, the leading products of the company, rose in the second half of 2016 compared with the same period last year, and the investment income of participating companies increased in the equity method compared with the same period last year. The net profit belonging to shareholders of listed companies is expected to increase by 70%, 100% over the same period last year, with a net profit range of 1.428 billion yuan to 1.68 billion yuan.
The chemical sector has a perfect industrial chain of integrated circular economy. Electricity and calcium carbide are the main costs in chlor-alkali chemical production, while Inner Mongolia is rich in coal resources, the company is located around Wuhai coal mining and processing enterprises are concentrated, a large number of low-cost thermal coal is used in the company's own power plant to generate electricity, the company has obvious advantages in power generation cost. The surrounding areas of Wuhai City have a large number of high-quality limestone resources, which can be used to produce low-cost high-quality calcium carbide. Compared with the companies in the same industry outside Inner Mongolia, the company has obvious advantages in electricity and calcium carbide cost. Relying on the integrated circular economy industrial chain of "coal-electricity-chlor-alkali chemical industry" and "coal-electricity-characteristic metallurgy", the company realizes the efficient transformation of resources and energy in place. At the same time, through the introduction of international advanced technology, equipment and advanced experience, and widely used in production, the company's technical equipment has reached the industry-leading level, thus forming the company's core competitive advantages in resources, cost, technology, scale and so on.
Improve the industrial layout of the financial industry. While maintaining the steady development of the chemical sector, the company has improved the industrial layout in the financial industry. The company currently holds 15.2951% of Huatai Insurance. In 2015, the company and Junzheng Chemical were delisted to acquire 3.1762% and 3.7985% of Huatai Insurance, respectively. The matter is being examined and approved by relevant departments. Upon completion of the examination and approval, the company will hold a total of 22.2698% of Huatai Insurance, making it the largest shareholder of Huatai Insurance. The company holds a 15.6% stake in Tianhong Fund and is its third largest shareholder. So far, the company has invested in four sub-areas of securities, banking, insurance and funds in the financial sector.
Industry is the wheel and finance is the wing. The company's annual report in 2015 mentioned the company's development strategy: it will continue to adhere to the development direction of both internal growth and extension development, and revolve around the industry-finance integration strategy of "industry as the wheel and finance as the wing". Strive to build into a "most competitive energy and chemical circular economy industrial chain" and "innovative financial industry" two-wheel drive of China's first-class group company. In the industrial sector, with the industrial development strategy of "steady expansion + mergers and acquisitions", on the basis of continuing to consolidate and enhance the advantages of circular economy integration, maintain the steady development of the industrial plate, and actively look for opportunities for mergers and acquisitions in the industry. continue to enhance the value of the company; in the financial sector, with the financial development strategy of "innovation + Internet", actively give play to the advantages of investment in the financial field, and promote the rapid improvement of corporate value.
Profit forecast and investment advice. We expect the company's net profit from 2016 to 2018 to be 1.538 billion yuan, 1.808 billion yuan and 2.065 billion yuan respectively, an increase of 83.13%, 17.53% and 14.26% over the same period last year, and the corresponding EPS is 0.18,0.21 yuan and 0.24 yuan per share respectively. With reference to the comparable company's valuation level, the company was given a target price of 5.25 yuan for 25 times PE,6 in 2017, covering the "overweight" rating for the first time.
Risk hint. The risk of price fluctuations of major raw materials; the risk of increased competition in the industry.
