In 2020, under the impact of the epidemic, the company still achieved reverse growth in performance, and 2021Q1 paid a premium in volume, resulting in a substantial increase in performance compared with 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. Due to the higher-than-expected rise in oil prices since the 2020Q4, we slightly reduce the company's 2021-2022 net profit forecast to 512 million yuan (the original forecast is 518 million yuan), and the new 2023 net profit forecast is 764 million yuan, corresponding to the EPS forecast of 0.75 million 0.90 PE 1.12 yuan, the current stock price corresponds to the 2020-2022 PE, respectively, and gives 20 times PE in 2021. Corresponding to the target price of 15 yuan, still optimistic about the company's long-term growth and business transformation brought about by the valuation improvement, maintain the "buy" rating.

2020, 2021Q1 homing net profit + 14.39%, 281.80% to 4.03, 51 million yuan compared with the same period last year. In 2020, the company realized operating income, return net profit and deducted non-return net profit of 57.08,4.03 and 375 million yuan, respectively, which was-10.65%, + 14.39% and + 16.59% respectively compared with the same period last year. In 2020, the company's gross profit margin increased to 13.23% compared with the same period last year, which is the key to the increase in profits against the trend. In the first quarter of 2021, the company realized operating income, return net profit and deducted non-return net profit of 13.82,0.51 and 46 million yuan, respectively, which were + 83.15%, + 281.80% and + 502.77% respectively compared with the same period last year. Compared with the performance under the impact of the 2020Q1 epidemic, the sales volume of polycarboxylic acid superplasticizer monomer of Q1 company increased by 82.51% year-on-year, and its gross profit increased by 44.92% compared with the same period last year. At the same time, the new business lithium battery electrolyte materials and pharmaceutical accessories significantly increased performance.

Domestic EO intensive processing and water reducer monomer leading position is stable. The company is the domestic ethylene oxide (EO) finishing and polycarboxylic acid superplasticizer monomer leading enterprises, by the end of 2020 has 800,000 tons / year ethylene oxide intensive processing capacity, and has the largest single plant scale of 50,000 cubic meters of low-temperature ethylene storage tank and 200000 tons of ethylene production capacity of EO. According to Zhuochuang information data, the apparent consumption of polycarboxylic acid superplasticizer monomers in China was 2.275 million tons in 2020, an increase of 28.2% over the same period last year. The company achieved sales of 662200 tons of superplasticizer monomers in 2020, with a market share of 29.1%. Since March 6, 2021, the company has expanded the EO production capacity of 200000 tons of ethylene in Jiangsu Oke by 100000 tons, which is expected to be completed in late April. The water reducer monomer in the park is also expected to expand 50,000 tons at the same time, and its leading position in the industry will be further stable.

Lithium battery electrolyte is progressing smoothly and is expected to promote the company's long-term sustainable growth. On October 27, 2020, the company announced that the "annual production of 20,000 tons of new energy lithium battery electrolyte solvent project" reached the conditions of continuous and stable production.

2021Q1 achieved 5600 tons of EC/DMC products, with an operating rate of 112%, a gross profit of about 32%, a gross profit of about 11.4 million yuan, and a gross profit of 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 driving force of the company's performance growth.

The high value-added areas downstream of EO are worth paying attention to. Ethylene oxide is the second largest downstream product of ethylene, with more than 5000 EO derivatives worldwide. In addition to superplasticizer monomers, the company is actively transforming to the downstream high value-added field of EO. At present, the company has a production capacity of 60,000 tons of Nonionic surfactants, 10,000 tons of pharmaceutical polyethylene glycol and 50,000 tons of industrial polyethylene glycol, which is expected to benefit from the high value-added business downstream of EO and continue to grow for a long time.

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

Investment suggestion: the company will still grow against the trend under the impact of the epidemic in 2020, and the 2021Q1 will pay a premium in volume, and its performance will increase significantly compared with 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. As the higher-than-expected rise in oil prices since 2020Q4 has pushed up the company's costs, we have slightly lowered the company's 2021-2022 net profit forecast to 5.12 / 610 million yuan (the original forecast is 518,612 million yuan), and the new 2023 net profit forecast is 764 million yuan, corresponding to the EPS forecast of 0.750.90 yuan 1.12 yuan, and the current stock price corresponding to the 2020-2022 PE is respectively times that of 13-11-9. With reference to the peer valuation of the superplasticizer link and the new material link of lithium battery, the target price of 20 times PE, in 2021 was lowered to 15 yuan. It is still optimistic about the valuation improvement brought about by the company's long-term growth and business transformation, and maintains the "buy" rating.