Event: on March 26, 2021, the company announced that it had completed the financing work for the acquisition of 37.72% of the equity transactions of Nylon Chemical Company. as of March 24, 2021, Shenma shares have actually issued 82079343 RMB common shares (A shares) to qualified specific investors, with a net fund raised of 5. 5%. 8.7 billion yuan.
Comments:
After the completion of the asset reorganization, the layout of the company's industrial chain was further optimized: the company completed the acquisition of 37.72% equity and supporting financing of Nylon Chemical Company in September 20 and March 21, respectively. the company has raised nearly 600 million yuan for 30,000 tons of ethylene glycol projects, nylon chemical industry hydrogen ammonia projects and listed companies to repay debts. The completion of the supporting financing marks the formal completion of all the transactions of this asset restructuring. Nylon Chemical is mainly engaged in the research, development, production and sales of nylon 66 salt and its intermediates. After the completion of this restructuring, the main body of listed companies further extends to the upper reaches of the nylon 66 industrial chain, effectively reducing procurement and production costs, and improving profitability. Form a good coordinated development effect. The completion of this acquisition of the stake in Nylon Chemical Company means that the company has become one of the leading enterprises in the domestic nylon 66 industry with large-scale production capacity and integrated production capacity of upstream raw materials.
The prosperity of nylon 66 industry has picked up, and the company's performance is expected to increase significantly in 21 years: affected by the COVID-19 epidemic in 2020, the downstream demand is weak, and the prosperity of nylon 66 industry is declining. As of 2020Q3, the price of the company's nylon 66 products has fallen sharply, and the sales of cord fabric and industrial silk have also declined, of which the sales of industrial silk, cord fabric and slices are 32800 tons, 45800 tons and 117000 tons respectively, which is-11.1%,-4.0% and + 13.6% respectively compared with the same period last year. The average selling prices of industrial silk, cord fabric and slices are 24631 yuan / ton, 30799 yuan / ton and 17095 yuan / ton, respectively, which are-18.9%,-11.2% and-25.7% respectively compared with the same period last year. The decline in volume and price of the company's main products led to a sharp decline in performance, as of 2020Q3 achieved a net profit of 130 million yuan,-76.6% compared with the same period last year. With the domestic epidemic under control, downstream demand continues to recover, and the prosperity of the industry gradually picks up. As of April 9, 2021, the price of nylon 66 rose to 42150 yuan / ton, up 43.4% from the beginning of the year. Nylon 66 prices and price spreads are expected to continue to rise, and the company's 21-year performance is expected to increase significantly.
Earnings forecast, valuation and rating: affected by the COVID-19 epidemic, the nylon 66 industry declined in 20 years. Since the beginning of 21 years, with the recovery of downstream demand, the industry boom continues to pick up, and the company's profitability is expected to improve significantly. Therefore, we lowered the company's 20-year profit forecast and raised the company's profit forecast for 21-22 years. It is estimated that the net profit for 2020-2022 will be 3.29 billion yuan (down 39%) / 8.74 billion yuan (up 36%) / 12.40 billion yuan (up 45%) respectively, equivalent to 1.31 yuan for EPS 0.39 picks 0.95 pounds, maintaining the "overweight" rating.
Risk hint: tight supply of adiponitrile affects production; downstream demand recovery is not as expected.