A leading integrated cogeneration company. Zhejiang Jiahua Energy & Chemical Co., Ltd. is the core enterprise of the China Chemical New Materials (Jiaxing) Park. The company uses cogeneration as the core device, and uses steam and electricity produced by advanced and efficient turbines. On the one hand, it supplies steam to chemical enterprises in the park and the neighboring Haiyan Economic Development Zone, and on the other hand, uses it for the production of its own chemical products. The company's specific products include 297,000 tons/year of chlor-alkali, 200,000 tons/year of fatty alcohol (acid), 300,000 tons/year of sulfuric acid, 30,000 tons/year of neighboring equivalents (sulfonation pharmaceuticals), etc.
The advantages of the recycling industry chain are obvious. The company's cogeneration supplies electricity and steam for chlor-alkali, fatty alcohols (acids), sulfuric acid, and neighboring counterpart devices. The chlor-alkali plant partially resumed production of hydrogen chloride to the sulfuric acid business, and part of the resumed production of chlorine gas was supplied to the sulfonated pharmaceutical business. The sulfuric acid plant provides chlorosulfonic acid, sulfur trioxide, etc. for neighboring products. The company's various industrial chains collaborate with each other to effectively convert by-products into products with higher added value and provide comprehensive benefits.
The chlor-alkali industry chain continues to improve, and ethylene-type PVC opens up room for growth. The company's chlor-alkali industry chain continues to improve. The company plans to issue no more than 1.8 billion yuan of convertible bonds to build 300,000 tons/year of dichloroethane and vinyl chloride projects and 300,000 tons/year of PVC projects. In 2018-2022, global ethylene production capacity expanded drastically. Combined with the decline in crude oil prices on the cost side, ethylene prices are expected to continue to decline and remain low. Ethylene PVC has obvious cost advantages and strong profitability. After the completion of the 300,000 tons/year PVC project, the company's performance will be greatly enhanced.
Continue to develop hydrogen energy to benefit from the great development of hydrogen energy. The company continues to develop the hydrogen energy industry, using hydrogen as a by-product for purification, and signed a tripartite cooperation agreement with American Air Products Company and Sanjiang Chemical to introduce advanced liquid hydrogen production technology to achieve low-cost large-scale hydrogen preparation and transportation. The company UN Hydrogen Rich Energy and Shanghai Reshaping established Jiangsu Jiahua Hydrogen Energy Technology Co., Ltd., which is committed to the investment, construction and operation of hydrogen refueling stations in the Yangtze River Delta region. On August 14, 2019, the holding subsidiary Jiangsu Jiahua Hydrogen Energy Gangcheng Hydrogen Refueling Station project was announced on the official website of the Zhangjiagang People's Government. It is estimated that the hydrogen fueling station will reach 1000 kg/day after completion. The company has achieved the layout of the entire industrial chain of hydrogen production, liquid hydrogen, and hydrogen refueling stations, which will fully benefit from the development of the hydrogen energy industry.
The sulfonation industry chain is improving. The company has a production capacity of 300,000 tons/year of sulfuric acid. It is the first enterprise in China to introduce a full set of American Monsanto process technology. The company and BASF jointly built an electronic-grade sulfuric acid production base, which was put into operation in 2016. As the electronic grade sulfuric acid project gradually reached production, the company's sulfuric acid product structure was continuously optimized, and profits continued to improve. Furthermore, sulfuric acid has expanded its neighboring products (sulfonamide) business. With the launch of new BA products and the 38,000-ton TA project, the proportion of high-value-added derivative products in the sulfonamide pharmaceutical industry is increasing, greatly increasing the added value of the industry chain and further opening up the market space for sulfonamide pharmaceuticals.
“Buy” investment ratings. The company's net profit from 2019 to 2021 is estimated to be 1,275/13.38/1,781 million yuan. The corresponding EPS is 0.89/0.93/1.24 yuan respectively, and PE is 10/10/7 times, respectively. Optimistic that the company will benefit from category expansion and rapid growth in production capacity investment performance, the company is given a “buy” investment rating.
Risk warning: Risk of downstream markets falling short of expectations, market development falling short of expectations, and price fluctuations of major products.