Main points of investment:
Sinochem International: with the fine chemical industry as the core, Sinochem Group is a large international state-controlled listed company. The company is a large state-controlled listed company with core competitiveness in the fields of intermediates and new materials, polymer additives, agrochemicals, natural rubber and so on. In 2019, the company achieved operating income of 52.846 billion yuan, down 11.86% from the same period last year, and realized net profit of 460 million yuan, down 49.54% from the same period last year. The decline in overall income and profits was caused by the global economic downturn in 2019 and the chemical industry entered a downward cycle.
Promote industrial integration and adhere to the development strategy of "doing both addition and subtraction". Over the years, the company has acquired a large number of high-quality assets through investment and mergers and acquisitions, including mergers and acquisitions holding Shengao Chemical, Yangnong Group, Sinochem Plastics, Sinochem Jiangsu, Sinochem Qingdao, Elix Polymers, Junsheng New Energy, etc., laying a good foundation for the smooth realization of industrialization transformation. At the same time, the company implements the industrial integration strategy, conducts continuous and in-depth research on the industries in which the main business is located, as well as industries and products with extended cooperation, finds strategic opportunities, organizes professional evaluation and analysis for key projects, and fully studies and demonstrates business coordination to promote M & An integration. Adhering to the development strategy of "addition and subtraction", the company cleaned up and withdrew the business and low-value projects that did not meet the requirements of the company's strategic transformation, which not only recovered part of the cash and realized the investment income, but also promoted the continuous optimization of the company's business portfolio.
Accelerate the construction of Lianyungang industrial base and build a leading domestic new material product chain. The company is the global leader of dichlorobenzene, trichlorobenzene and its downstream dichloroaniline, and has established market leadership and technical advantages in China in nitrochlorobenzene, epichlorohydrin and other products. The company vigorously promotes the construction of Lianyungang industrial base to build a domestic leading new material product chain with core technology, integrated development and a high degree of coordination. In 2019, the company's aromatics derivatives project 80,000 tons of nitrochlorobenzene and 10,000 tons of m-dichlorobenzene units were successfully put into production, the technical level of the plant reached the international leading level, and the feasibility study of the propylene industry chain project with imported propane as the source was completed. internal and external approval is being accelerated.
Agrochemical business to achieve the integration of research, production and marketing, the overall industrial scale leading in China. The agrochemical business of the company has the ability of integrated resource allocation and integrated operation of research, production and marketing, covering R & D, production, distribution, export trade and other fields. The overall industrial scale is leading in China, with dozens of varieties of raw drugs. With Baozhuo, 9080, Nongda, Moju and other well-known brands, high product potential and growth trend, with China's leading pesticide R & D basis and resources and the core advantages of production.
Profit forecast and valuation range. We estimate that the net profit of the company in 2020-22 is 544 million yuan, 630 million yuan and 685 million yuan respectively, and the corresponding EPS is 0.20,0.23,0.25yuan respectively. With reference to the valuation of comparable companies in the same industry, we believe that the reasonable valuation is 33-35 times PE in 2020, corresponding to a reasonable value range of 6.60-7.00 yuan, with an investment rating of "better than the big market" for the first time.
Risk tips: risk of price fluctuation of raw materials and products; risk of stringent safety and environmental protection policies; macroeconomic downturn.