Event: the company released the 2020 annual report, with revenue of 9.732 billion yuan during the reporting period, an increase of 40.79% over the same period last year, and a net profit of 355 million yuan per share, a discount of 0.29 yuan per share of EPS, down 19.77% from the same period last year.
Comments: the year-on-year decline in the company's performance in 2020 is mainly due to the impact of the COVID-19 epidemic on the global chemical industry demand, resulting in lower product prices, resulting in serious losses in the first two quarters. However, with the control of the domestic epidemic situation, the price and demand of the company's main products recovered, and the business performance of Q3 and Q4 improved significantly.
The profit of clean energy business is expected: 2020 is the first complete operation year of the 600000-ton MTO project put into production by Chengzhi Yongqing, a subsidiary of the company. The project adopts American UOP proprietary technology and has the advantages of mature and stable, easy to operate, low catalyst consumption and low equipment investment. During the epidemic period, Chengzhi Yongqing timely adjusted the operating load of the production plant and arranged for the maintenance of the plant to eliminate defects, and actively developed coal-based adiponitrile technology, planned to build an industrial demonstration plant of 3000 tons per year, and expanded its own butadiene industry chain. In addition, the company also signed an agreement with Chengzhi hydrogen Energy Co., Ltd., a joint venture established by AP, to speed up the construction of the first hydrogenation station and regional investment and operation center in Changshu, actively laying out hydrogen energy business. In the future, MTO business will continue to be the growth point of the company's performance.
The industrial hemp project continues to advance: Chengzhi Hanming, a subsidiary of the company, continues to promote the construction of the industrial hemp project, which is designed and built in strict accordance with drug GMP standards and relevant specifications, and is expected to be put into production in 2021. After the project is put into production, the company will have 2000 tons of industrial hemp mosaic processing capacity, becoming a large industrial marijuana processing and extraction base and industrial hemp industry complex in the world. In addition, Chengzhi Hanming League can produce high-purity CBD crystals (more than 99.5%), provide broad-spectrum oil without THC, and master the core technology of large-scale extraction of more than a dozen high-value cannabinoids, such as CBDV and CBC. Chengzhi Hanming League has obtained the "Yunnan Industrial marijuana planting license" and has begun to grow industrial marijuana, actively distributing the downstream applications of industrial marijuana, such as cosmetics, food, etc., and actively seeking sales expansion in international and domestic markets. With the gradual improvement of the epidemic situation, the future potential is promising.
LCD sales increased significantly: affected by the epidemic, global panel prices declined in 2020, panel cost pressure passed upstream, LCD product prices fell sharply, and market competition was fierce. Chengzhi Yonghua, a subsidiary of the company, actively adjusted its sales strategy, focusing on TV and the domestic market, achieving a year-on-year increase of more than 100% in TV LCD sales during the reporting period, and more than 50% in small and medium-sized products.
Earnings forecast, valuation and rating: as the construction progress of the company's industrial marijuana project is slightly lower than expected and a large number of polyolefin projects will be put into production in 2021, which will have a certain impact on the company's profitability, we have lowered our profit forecast for the company for 21-22 years and added a profit forecast for the company for 2023. It is estimated that the EPS of the company in 21-23 years is 0.44,0.54,0.62 yuan per share respectively. The company actively carries on the industrial chain extension layout, and vigorously promotes the new energy and medical business, which is still good for a long time, so it still maintains the "overweight" rating.
Risk Tip: the risk of a sharp rise in raw material prices, the promotion of new projects is not as expected.
