1. The PVC auxiliary industry continues to grow, and the new production capacity helps to increase the company's market share due to the increase in plastic consumption, the decline in product prices, the increase in demand for PVC flooring, and the rapid growth of the company's main products ACR and MBS auxiliaries market. From 2014 to 2019, the market of PVC impact modifiers and processing aids has an average annual growth rate of about 14%. We are optimistic about the continued market volume of the company's main products ACR and MBS in the future. There are three logic: a. The growing demand for plastic products will lead to the growth of the market for PVC auxiliaries. The decline in the cost of raw materials leads to a decline in the prices of ACR and MBS, which is expected to make it more competitive compared with other PVC auxiliary products and promote the corresponding market growth; C. the development of the PVC floor industry is expected to promote the growth of the ACR market; d. The domestic production rate of MBS is low, and the demand for domestic products is expected to further increase in the future.
Strong R & D strength + product customization + production capacity ranks in the forefront of the industry, the company's market share ranks in the forefront of the industry, and the competitive advantage is obvious. The company's market share in 2019 is about 30%, ranking in the forefront of the industry. The company has strong R & D capability and has obtained a total of 63 patents since its establishment. In terms of products, the company's product quality and technology have reached the international advanced level, and the variety of products is rich. Through the implementation of product customization strategy and close cooperation with downstream customers, PVC's major large customers have established long-term cooperative relations with the company. In terms of ACR business, the company is in the forefront of the industry in terms of production capacity and market share, and has a strong competitive advantage in emerging industries such as PVC flooring; in terms of MBS business, the company has a production capacity of 50,000 tons of MBS, ranking first in China, and is the first enterprise in China to achieve MBS 10,000-ton plant and continuous chemical industry production, with domestic leading production technology.
The new production capacity of PVC auxiliaries is expected to greatly increase the performance of the company. The company completed the first phase of 20, 000 tons of MBS project in the first half of this year. At present, a total of 40, 000 tons of PVC auxiliaries are under construction and are expected to be put into production in the second half of this year. The company's 20,000-ton MBS project is initially scheduled to start in the autumn and winter of 2020.
After the new PVC auxiliaries are put into production in the future, it is expected to greatly increase the performance of the company.
2. With the rapid development of degradable plastics, the company's 60,000-ton PBAT production line will become a new performance growth point affected by policies, PBAT will usher in a larger growth space. According to estimates, after the implementation of China's plastic ban and plastic restriction policy, the future demand for biodegradable plastics in the three areas of takeout, express delivery and agricultural film will reach 1.5453 million tons, corresponding to the degradable plastic market of about 27 billion yuan, compared with the market demand of 42000 tons in 2018. The space for growth is 36 times. PBAT has good extensibility, elongation at break, heat resistance and impact properties, so it is one of the most potential degradable plastic products, and there is a big market growth space in the future.
The company's layout of PBAT business is expected to bring a profit increase of 107 million yuan. The company's annual production capacity of 60,000 tons of PBAT biodegradable plastics project is scheduled to be completed before June 30, 2021. The project technology is provided by Shanghai Juyou Chemical Industry, with proprietary technology and equipment with independent intellectual property rights, and tens of thousands of tons of continuous production lines have been built in China. The company's annual output of 60,000 tons of PBAT biodegradable plastics project is expected to bring the company nearly 1.152 billion revenue and 107 million yuan net profit, performance growth of up to 100%.
It is estimated that the company's EPS in 2020, 2021 and 2022 will be 0.36 EPS 0.68pm 1.25 yuan respectively, corresponding to the dynamic PE in 35-19-10, and will be given a "buy" rating for the first time.
Risk tips: the company's project landing is not as expected, raw material prices fluctuate, new product PBAT development projects are not as expected, product prices decline and other risks