上海石化(600688):主业有望好转 碳纤维助力公司第二成长曲线

Shanghai Petrochemical (600688): The main business is expected to improve carbon fiber to help the company's second growth curve

中金公司 ·  10/27/2022  · Researches

3Q22 performance is in line with our expectations

The company announced 1-3Q22 results: revenue was 57.8 billion yuan, down 7% from the same period last year; net profit returned to the mother was-2 billion yuan, down 202% from the same period last year, in line with our expectations.

3Q22's revenue was 11.9 billion yuan, down 48% from the same period last year; the net profit from its mother was-1.6 billion yuan, down 217% from the same period last year, mainly due to 1) the explosion occurred in the company's ethylene glycol plant on June 18, 2022. After the accident, the company's main production equipment stopped and its operating performance declined significantly; 2) the average price increase of 1-3Q22 petrochemical products was less than that of crude oil.

3Q22's gasoline output was 350000 tons, down 64 percent from the same period last year and 35 percent from the previous year; diesel production was 240000 tons, down 72 percent from the same period last year and 40 percent from the previous year; and ethylene output was 60,000 tons, down 69 percent from the same period last year and 60 percent from the previous year.

Trend of development

The main equipment resumes operation, and the main business is expected to improve. On June 18, 2022, an explosion occurred in the ethylene glycol plant of the company's chemical department, with an annual production capacity of 255,000 tons / year (the sales revenue of the device accounted for 1.2% of the company's operating income in 2021). After the accident, the main production equipment of the company stopped. As of 3Q22, the company has properly dealt with the above accidents. At present, the company's main equipment has resumed work and production, and the company's production and business activities are back on track. We expect that as the negative impact of the accident recedes, the main business is expected to accelerate improvement.

Large tow carbon fiber input start-up, the next 2-3 years may continue to contribute to a large increase in performance. According to the company's website, on October 10, 2022, the first domestic line of China's first 10,000-ton 48K large tow carbon fiber project was put into operation in Shanghai Petrochemical carbon Fiber Industrial Base, and produced qualified products, and the product performance was comparable to that of foreign products of the same class, and the quality reached the international advanced level; at the same time, 24,000 tons / year raw silk and 120,000 tons / year large tow carbon fiber production capacity is expected to be completed and put into production in 2024. The company is a rare domestic enterprise with a complete set of production technology of large tow carbon fiber, and the product quality is widely recognized by the industry. In addition, thanks to the rapid growth in demand for large tow carbon fiber brought about by large wind turbine blades, the gross margin of large tow carbon fiber is expected to remain high. Therefore, we expect that the project will bring large incremental profits for the company in the next 2-3 years.

Profit forecast and valuation

Taking into account the impact of maintenance caused by the fire accident in the ethylene glycol plant area, we respectively reduced the 2022 / 23 return net profit by 188% to-1710 billion yuan. Taking into account the valuation improvement brought to the company by the carbon fiber new materials business, we lowered the target price of 11% soybean 24% to 4.00 yuan / 1.60 Hong Kong dollars, corresponding to the 44x/15x 2023 price-to-earnings ratio and 43% upside space to maintain the "outperform industry" rating of Aamp H shares. A Big H shares are currently trading at 36x/11x 2023 price-to-earnings ratios.


International oil prices fluctuated sharply, and the promotion of carbon fiber projects fell short of expectations.

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