Incident: The company released its 2024 semi-annual report. In 2024, H1 achieved operating income of 1.836 billion yuan, and realized net profit of 0.101 billion yuan, +0.049 billion yuan year on year; of these, Q2 achieved revenue of 1.079 billion yuan in a single quarter, -2% year-on-year, +43% month-on-month, and achieved net profit to mother -0.022 billion yuan, year-on-year +0.056 billion yuan billion yuan.
Comment:
Polyether sales increased in peak season, and Q2 performance improved markedly: the company's polycarboxylic acid water reducing agent polyether monomer was mainly used in infrastructure, real estate and other fields. In 2024 H1, the national fixed asset investment (excluding farmers) was 24.5 trillion yuan, up 3.9% year on year. Among them, infrastructure investment (excluding electricity, heat, gas and water production and supply) increased 5.4% year on year; real estate development enterprise housing construction area was 6.97 billion square meters, down 12.0% year on year. Effective demand in the polyether monomer market is insufficient, and price competition is intensifying due to excessive production capacity. In the short term, industry profits are under pressure. As a result, the company 24H1 is still in a state of loss. Looking at the single quarter, with the arrival of the peak construction season in the second quarter, the company's sales volume of water reducing agent polyether monomer products increased significantly. Combined with the situation in the Middle East in the second quarter mitigating the decline in crude oil prices and the increase in the load on ethylene manufacturers, the increase in ethylene supply, the reduction in ethylene prices, and the cost side declined, and the company's 24Q2 performance improved markedly from month to month.
Focus on the epoxy industry chain, continue to move towards the new energy and new materials market, and the production capacity under construction is building smoothly. The company is the manufacturer of new green and low-carbon fine chemical materials derived from ethylene oxide with the most complete industrial layout, the largest scale and the widest distribution in the domestic industry. It is one of the largest suppliers of new green and low-carbon fine chemical materials derived from ethylene oxide in the world.
The company has 0.05 million cubic meters of low temperature ethylene storage tanks, 0.3 million tons of commercial ethylene oxide and 1.6 million tons of ethoxylation capacity. The company is actively carrying out a project to transform technology into new energy materials. The 0.02 million ton vinyl sulphite (ES) project, a new lithium battery additive material, was completed and put into operation in January 2024. In terms of building production capacity, the company focuses on the epoxy industry chain and continues to advance towards the new energy and medical materials markets. According to the company's 2024 semi-annual report, the current production capacity projects currently under construction mainly include the second phase of 0.15 million tons/year epoxy ethylene oxide (propylene oxide) deep processing new material capacity expansion project, 0.2 million tons/year epoxy derived green energy new material project, and 0.15 million ton EO/PO deep processing equipment technology improvement project. As of the first half of 2024, the three projects are 19.67%, 100%, and 27.25%, respectively. In the future, as additional production capacity is put into operation, it is expected that the company's performance will be boosted to a certain extent.
Profit forecast, valuation and rating: The company focuses on the epoxy industry chain, actively lays out new energy and new material projects, and has broad scope for future development. We basically maintain the company's profit forecast for 2024-2025 and add a profit forecast for 2026. The company's net profit for 2024-2026 is 0.013/0.036/0.046 billion yuan, respectively, equivalent to EPS of 0.02/0.05/0.07 yuan, maintaining the company's “buy” rating.
Risk warning: the risk of raw material price fluctuations, the risk that downstream demand falls short of expectations, and the risk of production capacity construction progress falling short of expectations. Incident: The company released its 2024 semi-annual report. In 2024, H1 achieved operating income of 1.836 billion yuan, and realized net profit of 0.101 billion yuan, +0.049 billion yuan year on year; of these, Q2 achieved revenue of 1.079 billion yuan in a single quarter, -2% year-on-year, +43% month-on-month, and achieved net profit to mother -0.022 billion yuan, year-on-year +0.056 billion yuan billion yuan.
Comment:
Polyether sales increased in peak season, and Q2 performance improved markedly: the company's polycarboxylic acid water reducing agent polyether monomer was mainly used in infrastructure, real estate and other fields. In 2024 H1, the national fixed asset investment (excluding farmers) was 24.5 trillion yuan, up 3.9% year on year. Among them, infrastructure investment (excluding electricity, heat, gas and water production and supply) increased 5.4% year on year; real estate development enterprise housing construction area was 6.97 billion square meters, down 12.0% year on year. Effective demand in the polyether monomer market is insufficient, and price competition is intensifying due to excessive production capacity. In the short term, industry profits are under pressure. As a result, the company 24H1 is still in a state of loss. Looking at the single quarter, with the arrival of the peak construction season in the second quarter, the company's sales volume of water reducing agent polyether monomer products increased significantly. Combined with the situation in the Middle East in the second quarter mitigating the decline in crude oil prices and the increase in the load on ethylene manufacturers, the increase in ethylene supply, the reduction in ethylene prices, and the cost side declined, and the company's 24Q2 performance improved markedly from month to month.
Focus on the epoxy industry chain, continue to move towards the new energy and new materials market, and the production capacity under construction is building smoothly. The company is the manufacturer of new green and low-carbon fine chemical materials derived from ethylene oxide with the most complete industrial layout, the largest scale and the widest distribution in the domestic industry. It is one of the largest suppliers of new green and low-carbon fine chemical materials derived from ethylene oxide in the world.
The company has 0.05 million cubic meters of low temperature ethylene storage tanks, 0.3 million tons of commercial ethylene oxide and 1.6 million tons of ethoxylation capacity. The company is actively carrying out a project to transform technology into new energy materials. The 0.02 million ton vinyl sulphite (ES) project, a new lithium battery additive material, was completed and put into operation in January 2024. In terms of building production capacity, the company focuses on the epoxy industry chain and continues to advance towards the new energy and medical materials markets. According to the company's 2024 semi-annual report, the current production capacity projects currently under construction mainly include the second phase of 0.15 million tons/year epoxy ethylene oxide (propylene oxide) deep processing new material capacity expansion project, 0.2 million tons/year epoxy derived green energy new material project, and 0.15 million ton EO/PO deep processing equipment technology improvement project. As of the first half of 2024, the three projects are 19.67%, 100%, and 27.25%, respectively. In the future, as additional production capacity is put into operation, it is expected that the company's performance will be boosted to a certain extent.
Profit forecast, valuation and rating: The company focuses on the epoxy industry chain, actively lays out new energy and new material projects, and has broad scope for future development. We basically maintain the company's profit forecast for 2024-2025 and add a profit forecast for 2026. The company's net profit for 2024-2026 is 0.013/0.036/0.046 billion yuan, respectively, equivalent to EPS of 0.02/0.05/0.07 yuan, maintaining the company's “buy” rating.
Risk warning: the risk of raw material price fluctuations, the risk that downstream demand falls short of expectations, and the risk of production capacity construction progress falling short of expectations.