On January 4, 2024, Shenwan Hongyuan published research report Review Satellite Chemistry (002648).
Light hydrocarbon integration high-quality enterprises, relative advantages are significant. The company's main business is divided into functional chemicals, new energy materials, polymer new materials three segments, is the world's leading, the first domestic acrylic acid manufacturer, with the first set of imported ethane comprehensive utilization equipment, the first set of propane dehydrogenation equipment, the largest acrylic acid production equipment in China. The production capacity of HDPE, EO, EG, SAP, polyether macromonomer, hydrogen peroxide and other products ranks among the forefront in China. After years of development, the company has now formed C2, C3 double industrial chain layout, is the first domestic use of ethane cracking ethylene process route to produce ethylene, and has the advantages of C3 whole industry chain integration of enterprises. Compared with comparable companies, the company's performance is more stable, and the R&D expense rate is leading in the industry, and the unique layout of hydrogen energy and chemical new materials, and the growth space is constantly opening up.
C2 sector earnings are expected to improve, new materials to lead future growth. The price of ethane in the United States is closely related to the price of natural gas, and overseas natural gas prices are expected to fall, the IEA expects that the compound growth rate of global natural gas demand from this year to 2030 is only 0.4%, and the EIA expects that the growth rate of natural gas in the United States will further slow down next year, and supply and demand will remain loose. Domestic natural gas is still expected to be oversupplied by about 0.8 trillion cubic feet next year. We expect oil prices to remain high due to tight supply and demand balance, supporting the ethylene price trend, so the ethane-ethylene spread is expected to continue to repair in the future. C2 plate growth is mainly from high-end polyolefin materials, the company is actively building 600,000 tons of alpha-olefin, 700,000 tons of POE, 1 million tons of metallocene polyolefin, according to the current level of profitability, is expected to increase the company's profit 6.8 billion yuan in the future.
C3 profit is expected to bottom out and rebound, and the industrial chain layout continues to improve. At present, C3 industry chain has fallen to the bottom of history, continue to downward risk is small, is expected to gradually pick up in the future, mainly due to the construction of capacity downstream supporting acrylic ester more, the impact on acrylic supply and demand is limited, so acrylic profit expectations with the economic recovery and gradually repair. C3 plate increment next year mainly comes from 800,000 tons of butanol, short-term due to industry replenishment inventory, profit is still continuing to rise, but considering the future of more new production capacity, it is expected that after 2024 butanol profit is expected to maintain at a reasonable level. In addition, in October this year, the company announced the acquisition of Jiahong New Materials, continue to improve the company's C3 industry chain product structure, and further enhance the comprehensive competitiveness.
Investment analysis opinion: Considering that the demand for acrylic acid industry chain is greatly affected by real estate since the second half of 2023, we lower the company's 2023-2025 profit forecast to 45.3, 54.6, 6.59 billion (originally 50.7, 57.3, 6.93 billion), corresponding to PE valuation of 11X, 9X, 8X. Compared to comparable companies in the industry, the company's 2024 PE valuation is below the industry average and maintains a "buy" rating.
Risk warning: The domestic epidemic recovery is not as expected; The project schedule is not as expected; Large fluctuations in crude oil prices; Propane ethane prices have risen sharply.
(Source: Huibo Investment Research)
