The company's existing alcohol ether and ester products have a production capacity of 230000 tons, ranking first among domestic listed companies. The company's annual output of 150000 tons of PO project is about to be put into production, which is expected to contribute 1.4 billion yuan in revenue, and the certainty is high. Home-made PO is expected to lead to a significant reduction in the unit cost of alcohol ether and ester products, while ensuring the release of capacity. Taking the lead in adopting HPPO new technology has been recognized by the industry, and has signed a 103 million technology transfer contract with Yangnongzi Co., Ltd. Give the company a valuation of 14 times PE in 2021, corresponding to the target price of 67 yuan, cover for the first time, and give a "buy" rating.
The domestic alcohol ether ester industry leader, the downstream prospect is considerable. The company has a production capacity of 230000 tons, ranking second in China and the first in listed companies. Alcohol ether and its alcohol ether esters are produced by continuous tubular process and direct esterification respectively, and the technical level is leading in the industry. Downstream applications are widespread, traditional demand is growing steadily, and the compound growth rate is expected to be 4% in the future.
The demand for electronic chemicals is in the ascendant, the demand for electronic-grade alcohol ethers and esters is broad, the company's electronic-grade products have been put into production, and semiconductor-level products are being developed.
The high price of propylene oxide and the imminent commissioning of the PO project are expected to be the biggest driver of performance growth. The recent mismatch between supply and demand has led to an upward price of propylene oxide, which is currently as high as 19,000 yuan / ton. the first phase of the PO project with an annual output of 150000 tons is about to be put into production. we expect that after the project reaches production, excluding the self-use part, it can be exported 100000 tons.
It is expected that the propylene oxide project will be the biggest driver of the company's performance growth this year and next.
Propylene oxide is produced and supplied by itself, which is expected to stabilize the cost of alcohol ether and ester products and ensure the release of production capacity. The company only purchases about 30,000 tons of propylene oxide every year, and the existing alcohol ether and ester products are affected by the insufficient supply of propylene oxide upstream, and the operating rate is low. The price of superimposed propylene oxide soars and the gross profit margin is at a low level. After the production of propylene oxide is self-supplied, the company is expected to use 50,000 tons of propylene oxide per year, which is expected to lead to a significant reduction in the cost of alcohol ethers and esters.
Take the lead in the layout of HPPO route, the level of technology recognized by the industry, 103 million technology transfer benefits. The proportion of PO production capacity of domestic chlorohydrin method is more than 50%. Compared with the traditional chlorohydrin method, the process is shorter, the yield is high, and the environment is green. The company signed a 103 million yuan technology transfer contract with Ruiheng New Materials, a subsidiary of Yangnong Group, which is expected to further extend technical services and give full play to the company's technical advantages such as TS-1 catalysts.
Risk factors: propylene oxide project production schedule is not as expected; propylene oxide price fluctuates sharply; downstream demand is not as expected; production safety accidents occur.
Investment suggestion: it is estimated that the return net profit of the company in 2020-22 is-1.53 million yuan, 385 million yuan and 485 million yuan respectively, and the corresponding EPS forecast is-0.02,4.79,6.03 yuan respectively. Taking into account the PE valuation of the comparable company and the high growth expectations brought about by the company's new propylene oxide business in the next few years, the company is valued at 14 times PE in 2021, with a "buy" rating corresponding to the target price of 67 yuan for the first time.