Description of the event
The company released its 2024 semi-annual report, achieving operating income of 97.067 billion yuan, a year-on-year increase of 10.77%; realized net profit to mother of 8.174 billion yuan, a year-on-year decrease of 4.6%; and realized net profit deducted from non-mother of 8.099 billion yuan, a year-on-year decrease of 2.54%. Among them, 24Q2 revenue was 50.906 billion yuan, +11% YoY, +10% month-on-month; net profit to mother was 4.017 billion yuan, -11% YoY and -3%.
Incident reviews
Demand in the global polyurethane industry continued to grow in the first half of the year, and petrochemical profit levels were low. Demand in cold and automobile markets continued to grow, investment demand in the overseas construction industry improved, supply fluctuations in some overseas installations, and prices of pure benzene continued to be high, which had a driving effect on the price of polyurethane products. Affected by multiple factors such as price fluctuations in the international crude oil market and insufficient downstream demand in the petrochemical industry, although the petrochemical industry has recovered slightly, the overall profit level of the industry is still relatively low.
Sales of polyurethane and new materials achieved year-on-year growth, and the fine chemicals and new materials business performed well.
The company achieved revenue of 35.455 billion yuan in the polyurethane series business in the first half of the year, +8.19% year-on-year, with sales volume of 2.69 million tons, with an average sales price of 13,180 yuan/ton, a year-on-year decrease of 5.48%; achieved revenue of the petrochemical series of 39.575 billion yuan, +9.53% year-on-year, and 2.75 million tons of sales, a year-on-year decrease of 60%; achieved revenue of 12.979 billion yuan, year-on-year + 15.23%, sales 0.92 million tons, +24.32% year over year, average sales price was 14,107 yuan/ton, -7.32% year over year.
Prices of pure benzene continued to be high, and costs increased slightly during the period. According to Baichuan Yingfu, the average price of 24Q2 Qinhuangdao thermal coal Q5500 was 857.64 yuan/ton, -6.19% month-on-month, propane was 5196.74 yuan/ton, +0.73% month-on-month, butane was 5342.98 yuan/ton, +3.24% month-on-month, and pure benzene was 9038.06 yuan/ton, +9.74% month-on-month. The company's gross margin in the first half of the year was 16.41%, down 0.01pct year on year. The cost rate for the period was 5.5%, an increase of 0.67 pct over the same period last year.
The product structure is continuously optimized, and the development of differentiated products is progressing steadily. In terms of HDI products, with the successful commissioning of the 0.18 million tonne hexanediamine project, the HDI industry chain is more complete, and competitiveness continues to improve. MDI production capacity increased from 0.4 million tons/year to 0.8 million tons/year. With the commissioning of the company's BPA project, the PC industry chain is more complete, and its market share and profitability have been further increased; the first phase of the company's PoE project with an annual output of 0.2 million tons has already been put into operation, and the industrialization of emerging businesses such as citral and fragrance is being promoted.
The company signed agreements with ADNOC and others, and ethane cracking will bring additional volume. Wanhua Chemical, Wanrong New Materials, Abu Dhabi National Petroleum Corporation (ADNOC), Nordic Chemical (Borealis), and Borouge (Borouge) held a “Project Cooperation Agreement” signing ceremony in Beijing. Nordic Chemical's advanced and proprietary Borstar technology, ethane-based cracking process, and collaborative industrial chain utilization will be the core of the project. Including Borouge Chemical's rich experience in specialty polyolefin production (various raw material routes including ethane), together with Wanhua's advantages in the ethane supply chain (including ethane raw material costs, terminal resources, VLEC, production processes, etc.), it forms an excellent economic foundation for joint venture projects based on ethane raw materials. Future ethane cracking will bring additional amounts.
Investment advice
The company's net profit due to mother in 2024-2026 is 17.061, 22.176, and 25.463 billion yuan respectively, EPS is 5.43/7.06/8.11 yuan, and the corresponding PE is 13.8/10.6/9.2X, respectively, maintaining a “buy-B” rating.
Risk warning
The macroeconomic recovery fell short of expectations, product prices fell, and raw material prices rose.