Main points of investment
Event: the company issued an announcement to increase the capital of Chongqing Qiyuan Chemical Industry by 400 million yuan with its own funds in the form of cash contribution, of which 100 million yuan was used to increase its registered capital and 300 million yuan as its capital reserve. In addition, China Petroleum & Chemical Corp exploited China's first commercial shale gas field in Jiaoshi Town, Fuling District, near the company, and began supplying gas to the company on September 15, 2013. by the end of 2013, the company had used a total of 119 million cubic meters of shale gas.
The increase of capital will help to speed up the construction of the Chiyuan chemical project and enter into the field of new chemical materials. The wholly-owned subsidiary Chiyuan Chemical Construction has an annual output of 60,000 tons of 1,4butanediol / 46000 tons of polytetrahydrofuran project. This capital increase will help to meet the funding gap of the project and promote the smooth progress of the project construction. The polytetrahydrofuran project is expected to be completed and put into operation at the beginning of this year, and its profitability is higher than that of chemical fertilizer. after it is put into production, the business and product structure of the company will be improved and gradually transformed into a comprehensive chemical enterprise with both chemical fertilizer and chemical business.
The significance of shale gas cooperation with China Petroleum & Chemical Corp is more important than substance. The company has become the first user in China to transport a large amount of shale gas through pipelines, effectively alleviating the impact of insufficient natural gas supply on the company's production facilities, and we believe that the significance of this matter is more important than substance. The company is located in Fuling District, which is more than ten kilometers away from China Petroleum & Chemical Corp's Jiaoye 1HF well in Jiaoshi Town. Jiaoye 1HF is the first marine shale gas well with commercial discovery in China. The buried depth of the marine shale gas reservoir in the area where the well is located is less than 3500 meters, with shallow burial, large area and sufficient gas volume. At the initial stage of exploitation, the natural gas is compressed and liquefied and sold to the Chongqing market. As the gas output is stable and can meet the needs of users, it is directly supplied to Jianfeng Chemical Industry through the pipeline to produce urea. As the first commercial shale gas field in China, how to use shale gas and its cooperation with resources will be used as a blueprint for the subsequent shale gas projects produced by China Petroleum & Chemical Corp and Petrochina Company Limited in China. The traditional industry is facing a historic stage of transformation. As a SASAC holding enterprise, the direction of its future transformation gives the market a lot of room for imagination.
Performance forecasting and valuation. It is estimated that the company's EPS in 2013 and 2014 will be 0.01yuan and 0.02yuan respectively, and the corresponding dynamic PE will be 516.46 times and 209.21 times respectively, maintaining the "overweight" rating.
Risk hint: the price of natural gas has risen sharply; the progress of the Chiyuan chemical project is not as expected.