EASTERN SHENGHONG(000301):PREANNOUNCED 1H24 RESULTS IN LINE; REFINING AND PETROCHEMICAL BUSINESS LARGELY ACHIEVES BREAKEVEN
EASTERN SHENGHONG(000301):PREANNOUNCED 1H24 RESULTS IN LINE; REFINING AND PETROCHEMICAL BUSINESS LARGELY ACHIEVES BREAKEVEN
Refining and petrochemical earnings remained low; aromatics earnings were still high. In 2Q24, the average Brent crude oil price was US$85/bbl (up US$3/bbl QoQ) and fluctuated between US$80/bbl and US$90/bbl. Refining and petrochemical earnings remained low, with the average price spread of ethylene falling about 20% QoQ to Rmb941/t in 2Q24. Earnings of aromatic hydrocarbons remained strong in 2Q24, with the price spread of pure benzene and paraxylene (PX) growing 30% and 3% QoQ to Rmb2,918/t and Rmb2,669/t. In 3Q24, we expect the firm's earnings of PX to marginally weaken, as the peak season for refining in the US is coming to an end and oil blending demand is trending down QoQ.Preannounced attributable net profit down 80-83% YoY in 1H24
1H24歸屬淨利潤同比下降80-83%
Eastern Shenghong preannounced that its attributable net profit in 1H24 fell 80-83% YoY to Rmb300-350mn. It estimated its attributable net profit in 2Q24 fell 89-94% YoY to Rmb50-100mn. Its preannounced earnings are largely in line with our and market expectations.
盛虹預計1H24歸屬淨利潤同比下降80-83％，至人民幣3億元至3.5億元。預計2Q24歸屬淨利潤同比下降89-94％，至人民幣5000萬元至1億元。其預測收益與我們和市場預期基本一致。
Trends to watch
需要注意的趨勢
Refining and petrochemical earnings remained low; aromatics earnings were still high. In 2Q24, the average Brent crude oil price was US$85/bbl (up US$3/bbl QoQ) and fluctuated between US$80/bbl and US$90/bbl. Refining and petrochemical earnings remained low, with the average price spread of ethylene falling about 20% QoQ to Rmb941/t in 2Q24. Earnings of aromatic hydrocarbons remained strong in 2Q24, with the price spread of pure benzene and paraxylene (PX) growing 30% and 3% QoQ to Rmb2,918/t and Rmb2,669/t. In 3Q24, we expect the firm's earnings of PX to marginally weaken, as the peak season for refining in the US is coming to an end and oil blending demand is trending down QoQ.
煉油和石化業務收益依然低迷；芳烴業務收益仍然較高。在2Q24，布倫特原油平均價格爲每桶85美元（環比上漲3美元/桶），波動區間爲每桶80美元至90美元。煉油和石化業務收益依然低迷，乙烯的平均價差在2Q24環比下降約20％，至941元/噸。芳烴類碳氫化合物的收益在2Q24依然強勁，純苯和對二甲苯（PX）的價差環比分別增長30％和3％，達到每噸Rmb2,918和Rmb2,669。在3Q24中，我們預計公司PX業務的收益將略微減弱，因爲美國煉油高峰季節即將結束，油料混合需求環比下降。
Completion of projects to help improve efficiency. The Lianyungang Chemical Industrial Park has ample hydrogen resources, which has a significant positive impact on the firm's aromatics business. We expect the firm's PX production capacity to increase after its hydrogen project in Lianyungang is completed in 2H24. Meanwhile, we think the gas-based chemicals production base in Lianyungang Chemical Industrial Park enjoys ample resources and sound production conditions. We think the firm may further optimize raw materials for olefin production to improve its overall competitiveness.
項目的竣工有助於提高效率。連雲港化工產業園區擁有充足的氫氣資源，對公司的芳烴業務產生了重要的積極影響。我們預計，公司在連雲港的氫氣項目竣工後，PX產能將會增加。同時，我們認爲連雲港化工產業園區的基於氣的化學品生產基地擁有豐富的資源和良好的生產條件。我們認爲，該公司可以進一步優化石蠟烯生產的原材料，以提高其整體競爭力。
New material projects continue to contribute new capacity. We expect the firm's four ethylene vinyl acetate (EVA) production facilities (totaling 750,000t/yr of capacity) to commence production in 2H24-1H25. Its 200,000t/yr of propylene oxide capacity and 450,000t/yr of propylene oxide styrene monomer (POSM) capacity may come online in 2H24- 1H25, the 100,000t/yr of polyolefin elastomers (POE) capacity is likely to start operating in 1H25. In addition, its 340,000t of maleic anhydride capacity, 300,000t of 1.4-Butanediol (BDO) capacity, and 180,000t of polybutylene adipate-co-terephthalate (PBAT) are scheduled to commence operation in 2025-2026. We believe the firm will largely complete its new material projects in 2024-2026, implying substantial growth potential in the long term.
新材料項目繼續爲公司貢獻新增產能。我們預計公司四個乙烯醋酸乙烯（EVA）生產設施（總產能75萬噸/年）將在2H24-1H25投產。它的20萬噸/年丙烯醇和45萬噸/年丙烯醇苯乙烯單體（POSM）產能可能在2H24-1H25上線，而10萬噸/年聚烯烴彈性體（POE）產能可能在1H25開始運營。此外，它的34萬噸/年馬來酸酐產能，30萬噸/年1.4-丁二醇（BDO）產能和18萬噸/年聚丁二酸共三亞甲基酯（PBAT）計劃在2025-2026年投產。我們認爲，該公司將在2024-2026年間在新材料項目方面取得重大進展，從而帶來長期的增長潛力。
Financials and valuation
財務和估值。
Given the slower-than-expected recovery of the firm's refining and petrochemical business, we lower our 2024 and 2025 earnings forecasts 42% and 30% to Rmb2.1bn and Rmb2.8bn. Considering earnings forecast revisions and valuation growth driven by new material businesses, we cut our target price 22% to Rmb9.0, implying 29x 2024e and 21x 2025e P/E, offering 12% upside. We maintain an OUTPERFORM rating. The stock is trading at 25x 2024e and 19x 2025e P/E.
考慮到公司煉化業務復甦較慢，我們將其2024年和2025年盈利預測下調了42％和30％至人民幣21億元和28億元。考慮到盈利預測修訂和新材料業務帶來的估值增長，我們將目標價下調了22％至人民幣9.0元，意味着2024年和2025年市盈率分別爲29倍和21倍，提供12％的上行空間。我們維持增持評級。該股正在以25倍2024年預測市盈率和19倍2025年預測市盈率交易。
Risks
風險
Slower-than-expected construction and operation of new projects; disappointing EVA earnings.
新項目的施工和運營較慢；EVA收益令人失望。
譯文內容由第三人軟體翻譯。
