The company closed the wujing park light, the cost rate dropped significantly, the future focus on chlor-alkali business, capacity continued to expand.
After the recovery of the chlor-alkali industry, the performance will be more explosive. Cover for the first time and give a neutral rating.
Main points of investment:
For the first time, the coverage gives a neutral rating. At present, the chlor-alkali industry is in a downward trend, but after the company closes the wujing park, the cost has dropped sharply. It is predicted that the EPS from 2019 to 2021 (the next three years) will be 0.72,0.79,0.81, with a growth rate of-21%, 11% and 2%.
The veteran leading chlor-alkali company has closed the wujing park and packed it light. The company is a leading chlor-alkali manufacturer with a production capacity of 720000 tons of caustic soda, 720000 tons of dichloroethane, 600000 tons of liquid chlorine, 80,000 tons of paste and special resin. The construction capacity includes 200,000 tons of vinyl chloride expansion project and 200000 tons of paste resin second phase project, which will continue to expand in the future. When the company closed the wujing Park in 2017, the administrative expenses were greatly reduced, the profitability was greatly improved, and the ROE level was higher than the industry average.
Integrated business operation mode, break through overseas monopoly chlorine cycle technology. The company's production base is located in Shanghai Chemical Industry Park, which can give full play to the synergy of upstream and downstream industrial chains and work closely with international chemical companies to establish an integrated operation mode of plant matching and pipeline transportation in the chemical zone. In addition, the company's Deacon technology has entered the feasibility report preparation stage and has obtained five authorized patents. After the project is completed, it will break through the overseas patented technology, which can not only realize the chlorine cycle to reduce costs, but also expand the chlorine supply to improve performance.
Waiting for the chlor-alkali industry to pick up. The main contribution to the company's performance comes from caustic soda, accounting for 66.42% of the net profit. Since 2018, the downstream alumina industry has been in a downward cycle and the liquid chlorine market has changed from weak to strong. From the point of view of demand and chlor-alkali balance, the price of caustic soda is lack of support. In view of the close relationship between the demand for alumina and the area completed by real estate, we expect that the area completed by real estate may pick up in the second half of the year, thus driving the demand for alumina upward in a short period. In addition, with the improvement of in-situ digestibility of liquid chlorine, the chlor-alkali imbalance is expected to be alleviated, and the efficiency of the chlor-alkali industry will be improved.
Risk tips: the risk of flagging demand, the risk of a sharp decline in prices.