Continuous insoluble sulfur breaks Eastman monopoly and has a large space for import substitution. Insoluble sulfur is an important auxiliary of tire. The tire with insoluble sulfur has good wear resistance, long service life and more energy saving. The global demand for insoluble sulfur is 300000 tons, and more than 60% of the market is monopolized by Eastman. Eastman's insoluble sulfur is a continuous process. Domestic enterprises used to be solvent batch process. Compared with batch process, continuous process products have the advantages of high price, stable quality and less pollution. The company successfully broke the Eastman monopoly. The production capacity of 20,000 tons of continuous insoluble sulfur was officially put into production in January 2020, and the current products are in short supply. The company has also planned 40,000 tons of continuous insoluble sulfur, which will start construction in the first half of 2020 and is expected to be put into production in mid-2021. The company is the only domestic manufacturer with continuous insoluble sulfur process, and there is a lot of room for product import substitution.
The price of the main product has reversed at the bottom, and the current price is in the middle of history. The price of the company's main products began to decline in the second half of 2018 and reached an all-time low in mid-2020. In the second half of 2020, with the recovery of the downstream automobile industry, the price of the company's main products began to pick up, and the price of anti-coke agent rose from 23000 / ton in September 2020 to the current 32000 / ton, an increase of 39.13%. The price of accelerant rose from 18000 / ton in late September 2020 to 25000 / ton, an increase of 38.89%. The price of anti-coke agent is in the middle of history, and the price of accelerant is in the middle of history. Anti-coke agent is a single oligopoly, the company's global market share is more than 60%; accelerant production enterprises are relatively scattered, but the market share of leading enterprises continues to increase. The company's main products long-term price trend upward.
A number of new products to be built, good long-term growth. The company has reserved a number of new products. 35000 tons of resin and 10, 000 tons of adhesive HMMM will be built in 2021. The new adhesion accelerator HMMM is a substitute for HMT. HMT is difficult to disperse and toxic in use, and there are problems such as releasing ammonia in the vulcanization process. HMMM will be the mainstream product developed in the bonding system in the future, and HMMM will also be a high-end variety in the coating industry. The company expects the domestic demand to reach 100000 tons, and the company has built a production capacity of 6000 tons, which is about to add another 10, 000 tons. The company will have other new products to be built in the future, with outstanding long-term growth.
Maintain the "highly recommended-A" investment rating. According to the company's capacity release and the price of its main products, we expect the company's performance to increase significantly compared with the same period last year in the fourth quarter of 2020 and the first quarter of 2021, especially in the first quarter of 2021. From 2020 to 2022, the company is expected to achieve an income of 2.11 billion yuan, 2.745 billion yuan and 3.153 billion yuan, with a net profit of 143 million yuan, 385 million yuan and 510 million yuan, EPS of 0.38,1.03,1.36 yuan and PE of 32.1,11.9 and 9.0 times, respectively. The valuation is low, the margin of safety is high, and the investment rating is highly recommended.
Risk hint: the risk of large fluctuations in product prices, the risk that demand does not meet expectations, and the risk of slow production capacity construction.