The company predicts that the net profit in the first quarter of 2021 will be 50 million to 60 million yuan, a substantial increase of 273.43% and 348.12% over the same period last year. It is expected that after the completion of Jiangsu Oak's recent capacity expansion and transformation, the company's position as a domestic EO intensive processing and superplasticizer monomer leader will be further consolidated. The production capacity of lithium battery electrolyte materials is in line with the national carbon neutralization strategy, and is expected to become the core growth pole of the company, and the layout of pharmaceutical polyethylene glycol, surfactants and other new businesses are also expected to provide diversified growth space. We maintain the homing net profit forecast of the company from 2020 to 2022 is 4.1 million yuan, and the corresponding EPS forecast is 0.60, 0.76 and 0.90 yuan, respectively. The current stock price corresponds to 2020-2022 PE, which is twice as much as that of 17-13-11. Still optimistic about the company's long-term growth and business transformation brought about by the valuation improvement, maintain the "buy" rating.

It is estimated that 2021Q1 will achieve a net profit of 50 million to 60 million yuan, which is + 273.43% and 348.12% compared with the same period last year. The company issued a forecast for the first quarter of 2021, which is expected to achieve a net profit of 0.5-60 million yuan in the first quarter of 2021, a substantial increase of 273.43% to 348.12% relative to 2019Q1 performance after retroactive adjustment over the same period last year. 2021Q1's operating revenue increased by 82.69% compared with the same period last year, and the comprehensive gross profit of its products increased by 51.06%.

Q1 superplasticizer monomer sales increased significantly, domestic EO deep processing and superplasticizer monomer leading position is stable.

In the first quarter of 2021, the sales of polycarboxylic acid superplasticizer polyether monomer increased by 82.51%, and the gross profit increased by 44.92%. In the first quarter, the oil price of Brent rose from $50 / barrel to more than $71 / barrel, driving up the prices of ethylene, ethylene oxide and other petrochemical products significantly. However, due to the off-season of sales of superplasticizer in the first quarter, the overall price change of superplasticizer monomer was small. We calculated that the price differences of 2021Q1 superplasticizer monomer-ethylene oxide and superplasticizer monomer-ethylene were 2065 and 4236 yuan / ton, respectively, compared with the same period last year.-1.81% and-25.20%, respectively. The company offset the sharp rise in oil prices through the substantial increase in sales, achieving a substantial increase in the gross profit of the main business compared with the same period last year. The company began to expand and transform the 200000 tons of ethylene EO production capacity of Jiangsu Oke on March 6. It is expected that after the transformation is completed by the end of April, it will have 300000 tons of ethylene EO and 1.3 million tons of EO intensive processing capacity, and the domestic EO fine deep processing and superplasticizer monomer leading position is stable.

Lithium battery electrolyte is progressing smoothly and will become the main growth pole of the company. According to the data of the China Automobile Association, 2021Q1 produces / sells 533000 / 515000 new energy vehicles in China, which is + 319% and 280% compared with the same period last year. The demand for lithium battery-related materials for new energy vehicles is strong. In the first quarter, the company realized 5600 tons of EC/DMC products, the operating rate of production capacity reached 112%, the gross profit of the electrolyte materials business was about 32%, the gross profit was about 11.4 million yuan, and the corresponding unit ton selling price and gross profit was about 6362 yuan and 2036 yuan per ton. At present, the company has realized the batch supply of battery-grade products to the mainstream electrolyte manufacturers, with the expansion of Jiangsu Oke EC/DMC production capacity from 20,000 tons to 30,000 tons, the continuous increase in the proportion of battery-grade shipments and the further improvement of business coordination with the participating additive supplier Suzhou Huayi, it is expected that electrolyte-related business will become the main growth pole of the company's performance.

Positive transformation, EO downstream high value-added areas worthy of attention. Ethylene oxide is the second largest downstream product of ethylene, with more than 5000 EO derivatives in the world, and the company is actively transforming to the downstream high value-added field of EO. At present, the EO-to-EC/DMC technology, which is being vigorously developed, uses CO2 as the raw material, which is deeply in line with the national carbon neutralization strategy; on December 21, 2020, it was announced that it had acquired 67% equity of Oke Pharmaceutical Auxiliary with 173 million yuan, and entered the field of pharmaceutical polyethylene glycol; in addition, the company currently has a production capacity of 50,000 tons of Nonionic surfactants, and many products with diversified and high value-added products downstream of EO are expected to provide a broad space for the company's development.

Risk factors: a sharp decline in infrastructure investment; fluctuations in the prices of products and raw materials; and the progress of new business is not as expected.

Investment suggestion: the company expects to achieve a net profit of 50 million to 60 million yuan in the first quarter of 2021, a substantial increase of 273.43% and 348.12% over the same period last year. It is expected that after the completion of Jiangsu Oak's recent capacity expansion and transformation, the company's position as a domestic EO intensive processing and superplasticizer monomer leader will be further consolidated, lithium battery electrolyte material production capacity in line with the national carbon neutralization strategy, and is expected to become the company's core growth pole, the layout of pharmaceutical polyethylene glycol, surfactants and other new business is also expected to provide diversified growth space. We maintain the company's 2020-2022 homing net profit forecast of 4.1 million yuan 52pm, corresponding to the EPS forecast of 0.60Universe 0.76Universe 0.90 yuan, the current stock price corresponding to the 2020-2022 PE is respectively times that of 17-13-11. Still optimistic about the company's long-term growth and business transformation brought about by the valuation improvement, maintain the "buy" rating.