Events:
On July 14, 2021, Donghua Science and Technology issued the announcement on investing in Xinjiang dawning Luhua Biotechnology Co., Ltd and the announcement on investing in Yulin Chemical Yudong Science and Technology Co., Ltd.
Comments:
The company plans to invest 50 million yuan, accounting for 5% of the equity, and jointly invest in the establishment of Xinjiang Shuguang Luhua Biotechnology Co., Ltd. in conjunction with Anhui Shuguang and Xinjiang Luyuan, and dawning Luhua invests in the construction and operation of 100,000 tons / year BDO co-production of 120000 tons of PBAT project. The construction period is about 26 months, and the total investment of the project is estimated to be 3.569 billion yuan, of which the construction investment is 3.35 billion yuan.
The policy will be vigorously promoted to consolidate the position of the PBAT plate. China continues to launch the top-level design of plastic pollution control, and 30 provinces, autonomous regions and cities across the country have announced implementation plans for plastic pollution control. The company has carried out PBAT product modification, catalyst development and other research and development work, give full play to the technical advantages of engineering companies, improve and reduce plant material consumption and energy consumption, and promote the development of PBAT industry technology. At present, the market gap is large and the development prospect is good.
Join forces to expand the business. Investment pull DMC (dimethyl carbonate) engineering business, the company plans to invest 50 million yuan, together with Shaanxi Coal Group Yulin Chemical Co., Ltd. jointly invested in the establishment of "Yulin Chemical Yudong Science and Technology Co., Ltd.". Investment, construction and operation of the "demonstration project of 500,000 tons / year DMC of new chemical materials demonstration project of coal quality utilization". The construction scale of the first phase is 100,000 tons / year, and the construction period is 18 months. it is estimated that the total investment of the first phase of the project is 849 million yuan, of which the construction investment is 831 million yuan.
DMC demand potential, the company's industrial development. DMC is a low-toxic and environment-friendly chemical product, the rapid development of electrolyte and the localization of PC is expected to continue to promote the rapid improvement of DMC needs. In addition, DMC is a substitute for MTBE as an additive for steam / diesel, which is quite economical. The company jointly invests in Yudong science and technology, further strengthens the strategic cooperation between the company and Yulin Chemical and Shaanxi Coal Chemical Group Co., Ltd., and continues to make efforts in engineering construction and industrial development. Consolidate the market position of DMC engineering construction and expand the industrial layout of new chemical materials. Implement one of the three major strategies of the company's "14th five-year Plan" into industrialization.
Give the company a "buy" rating. Due to the active promotion of the company's project, adjust the target price to 14.5 yuan. It is estimated that the EPS of the company from 2021 to 2023 will be 0.43 RMB 0.58 RMB.
Risk hint: the landing of the project is not as expected, and the valuation and profit expectations are not as expected.