The production of 15000 tons of intermediate accelerator M will reduce the cost of accelerator. The company issued a rights issue project in 2017, the main construction projects are 20, 000 tons of insoluble sulfur and 15000 tons of accelerant M (the 10, 000 tons of accelerant NS planned in the original investment project has been terminated). Accelerator M is the intermediate of accelerator NS and accelerator CBS. The company's original accelerator M has a production capacity of 15000 tons, which can not fully meet its own use. The increase of 15000 tons of accelerator M will reduce the raw material costs of accelerator NS and accelerator CBS, and the new accelerator production capacity of 15000 tons will use the solvent process, which solves the problem of large amount of waste water in the traditional acid-base process and eliminates the discharge of process wastewater. The difficult problem of resin extraction is solved, and the product quality is excellent and the advantage of environmental protection is obvious.

The 90,000-ton rubber auxiliary project continues to be put into construction and has a good long-term growth. The production capacity of 20,000 tons of continuous insoluble sulfur in the company's 2017 rights issue project was officially put into production in January 20. Continuous insoluble sulfur broke the monopoly of Eastman abroad, and only the company can produce it in China. Compared with the intermittent process, the continuous process products have the advantages of high price, stable quality and less pollution, and the current company's products are in short supply. At the end of 2019, the company planned a construction project of 90,000 tons of high-performance rubber auxiliaries, of which 40,000 tons of continuous insoluble sulfur is expected to be released in mid-2021. Among the 90,000 tons of rubber auxiliaries project, other large ones are 35000 tons of resin and 10,000 tons of adhesive HMMM. Among the resin products, the company has reserved ordinary tackifying resin, low heat super tackifying resin, long-term wet heat resistant super tackifying resin and so on. The new adhesion accelerator HMMM is a substitute for HMT, HMT is difficult to disperse and toxic in the process of use, and ammonia is released in the vulcanization process, HMMM will be the mainstream product in the development of the bonding system in the future, while HMMM is also a high-end variety used in the paint industry, it is expected that the domestic demand can reach 100000 tons, the company has built a production capacity of 6000 tons, and plans to add another 10,000 tons.

The prosperity of the industry has rebounded, and the prices of the main products have reversed at the bottom. The price of the company's main products began to decline in the second half of 2018 and reached an all-time low in mid-2020. In the second half of 2020, with the recovery of the downstream automobile industry, the price of the company's main products began to pick up. According to Zhuangchuang data, the price of accelerant NS rose from 18750 yuan / ton in late September 2020 to 25650 yuan / ton recently, an increase of 36.8%. The price of accelerator CZ rose from 16350 yuan / ton in early September 2020 to 24850 yuan / ton recently, an increase of 51.99%. The price of accelerator M rose from 10350 yuan / ton at the beginning of September 2020 to 14500 yuan / ton recently, an increase of 40.10%. According to the historical price trend, the current accelerator price is still below the median.

Accelerant production enterprises are relatively scattered. According to Zhuangchuang data, there are 16 accelerator production enterprises in China, with a total production capacity of 600000 tons. The top four production enterprises (Kemai, Shangshun, Weilin and Yanggu Huatai) account for 66% of the total production capacity. However, small enterprises will gradually withdraw for a long time, and the concentration of leading enterprises will increase. The company's anti-coke agent occupies more than 60% of the global market share, the industry pattern is good, the profit is stable, the demand is good, the current price has rebounded, and the price is expected to rise further.

Maintain the "highly recommended-A" investment rating. According to the company's capacity release and the price of its main products, we expect the company's performance to increase significantly in the fourth quarter of 2020 and the first quarter of 2021, especially in the first quarter of 2021 compared with the same period last year. From 2020 to 2022, the company is expected to achieve income of 2.11 billion yuan, 2.781 billion yuan and 3.001 billion yuan, net profit of 148 million yuan, 401 million yuan and 458 million yuan, EPS of 0.40,1.07 and 1.22 yuan, PE of 29 times, 11 times and 9 times respectively, low valuation and high margin of safety, and maintain "highly recommended-A" investment rating.

Risk hint: the risk of large fluctuations in product prices, the risk that demand does not meet expectations, and the risk of slow production capacity construction.