Jiahua Energy announced the 2021 semi-annual report. In the first half of 2021, the company achieved operating income of 3.368 billion yuan, an increase of 34.04% over the previous year, and achieved net profit of 713 million yuan, an increase of 28.47% over the previous year.
Revenue for the first half of 2021 was mainly due to an increase in product sales volume and sales prices. 1) In terms of operating income by product, fatty alcohol (acid), sulfonated pharmaceutical series products, sulfuric acid (total acid), chlor-alkali, steam, photovoltaic power generation, handling and related revenue for the first half of 2021 changed by 39.61%, 8.19%, 161.82%, 32.83%, 35.81%, 199.15%, 4.57% to 13.21, 3.65, 0.75, 4.76, 8.43, 0.68, 71 million yuan; 2) Looking at fatty alcohols (acids), sulfonated pharmaceutical products, sulfuric acid (total acid) Volume), chlor-alkali, steam, photovoltaic power generation, handling and related gross margins for the first half of 2021 changed 1.45, -26.58, -19.01, -2.42, -5.81, 91.80, and 5.74 percentage points, respectively, to 21.25%, 32.72%, 28.93%, 34.22%, 31.69%, 55.02%, and 86.78%; 3) Sales, management (including R&D), and financial expense ratios for the first half of 2021 changed -1.07, -0.36, -0.43 percentage points, respectively 0.19%, 5.95%, and -0.25%. The total three cost rate changes were -1.86 percentage points to 5.89%.
The company's major projects have been completed one after another, laying a good foundation for achieving continuous growth in the future. The company's 300,000 tons/year polyvinyl chloride project and 300,000 tons/year ethylene chloride and vinyl chloride (VCM) project have been put into operation, and the products have begun to be sold to the market; the company is promoting the 4,000 tons/year BA project (sulfonation industry safety and environmental protection improvement project) in an orderly manner and supporting the construction of continuous sulfur trioxide technology improvement projects. Some of the continuous sulfur trioxide sulfation technology improvement projects have been completed; the waste acid pyrolysis project has now been completed and has entered trial production; the 4000 tons/year BA project has been installed and has entered the commissioning stage. The two full-capacity tanks of the company's cryogenic tank farm project have all been raised to the top and have entered the inner tank construction stage.
The company changed the use of some share repurchases. Previously, the company implemented share repurchases for the first time on January 16, 2019. The repurchase of shares is intended to be used for employee stock ownership plans, equity incentives, etc. As of July 5, 2019, the repurchase implementation period has expired. The company has repurchased a total of 40,785,336 shares through centralized bidding transactions, accounting for 2.85% of the company's total share capital. The highest transaction price was 10.86 yuan/share, and the lowest transaction price was 8.70 yuan/share. The company plans to adjust the use of the remaining 30,785,336 repurchased shares from the original plan of “corporate bonds that can be converted into shares issued by listed companies” to “a plan for cancellation to reduce registered capital and employee shareholding”.
Profit forecasts and reference ratings. We expect the company's EPS to be 1.05, 1.30, and 1.42 yuan respectively in 2021-2023. Referring to the valuations of comparable companies in the same industry, we think the reasonable valuation range is 11-13 times PE in 2021, and the corresponding reasonable value range is 11.55-13.65 yuan, giving it a superior market rating.
Risk warning. The progress of production capacity investment under construction fell short of expectations, prices of products such as fatty alcohols and sulfonated pharmaceuticals fluctuated greatly, raw material prices fluctuated, and the macroeconomic economy declined.