Zhongtai Securities: Give Changhai shares an overweight rating

2022-01-20Sun Ying and Nie Lei of Zhongtai Securities Co., Ltd. conducted a study on Changhai shares and released a research report "Q4 Steady Operation, Growth Can Be Expected", this report gives an overweight rating to Changhai Shares, and the current stock price is 17.11 yuan.

Changhai Shares (300196)

Q4 Steady operation, performance in line with expectations

The company released the 2021 performance forecast, and achieved a net profit attributable to the mother of 545-605 million yuan during the reporting period, YoY +101.3%-123.5%, a median value of 575 million; a non-net profit of 465-525 million, YoY +83.7% -107.4%, a median value of 495 million. Among them, the median net profit attributable to the mother/net profit deducted in the fourth quarter was 1.55/132 million, respectively, and the performance was in line with expectations. The Company's non-recurring profit and loss during the Reporting Period was RMB70-98 million, an increase of approximately RMB52.4 million to RMB80.4 million year-on-year, which we judge is mainly due to the sale of precious metals by the Company. Considering that under the continuation of the high prosperity of the glass fiber industry, the company's glass fiber and products business has achieved a simultaneous increase in volume and price, and the company has further strengthened its internal management, effectively improved the efficiency of operation and management, and achieved cost reduction and efficiency, we expect that the company's performance in 2021 is expected to fall in the upper median range.

The glass fiber business is about to increase, and the expansion of chemical production capacity is steadily advancing

According to Zhuo Chuang information, on September 14, the company's new 100,000 tons of glass fiber yarn production capacity ignition, we expect 21Q4 has begun to release part of the production, we estimate that Q4 single quarter glass fiber and products sales of nearly 60,000 tons, compared with Q3 has improved. With the continuous release of the new 100,000 tons of glass fiber yarn production capacity, we expect the sales growth of glass fiber and products business to accelerate in 2022. Affected by the dual control of energy consumption, the construction progress of the 600,000 tons of glass fiber yarn production capacity announced by the company has slowed down, but it is still steadily advancing, and we judge that under the company's focus on the main business, the medium- and long-term growth is still expected to be gradually realized. Under the continuation of the glass fiber boom, we estimate that the profitability of glass fiber and products business in the Q4 single quarter remained stable at about 2400 yuan. We estimate that the sales volume of chemical products in the Q4 single quarter is about 20,000 tons. The company's original annual output of 25,000 tons of unsaturated polyester resin production line technical transformation and expansion to 100,000 tons of project is still steadily advancing, we expect to be expected to be put into operation in 22Q1, when the growth of chemical products is expected to accelerate. The profit model of the company's chemical business is mainly to earn processing fees, and the cost-side changes can be smoothly transmitted to the downstream, and we expect the profitability of the chemical business to remain stable in the Q4 single quarter, about 800 yuan.

The industry cycle is weakening, the prosperity is expected to continue, and the company's competitiveness continues to improve

We expect that the industry's new roving capacity will be limited in 22 years, about 420,000 tons, and under the overall improvement of the demand side, we expect that the supply and demand of rovings in 22 years is expected to remain tightly balanced. According to Zhuo Chuang Information, at the end of December, the glass fiber industry inventory of 201,000 tons, in the inventory at a historical low, we judge that the 22-year roving boom is expected to continue. In the medium and long term, under the "dual control of energy consumption", the difficulty of new production capacity in the industry has increased, and the uncertainty of landing has increased, and the growth rate of the supply side of the industry may slow down; driven by wind power, automobiles, electronics and other fields, the demand side has grown steadily; we judge that the tight balance between supply and demand in the industry is expected to be normalized. The company continues to enhance its competitiveness in terms of industrial chain integration/product structure/cost. In terms of industrial chain integration, the company's glass fiber yarn / product synchronous expansion, enhance product sales flexibility / profit stability; product structure, we expect the company will continue to increase the proportion of wind power / thermoplastics and other high-end products, optimize the structure of roving products; cost, the company continues to improve the proportion of sizing self-supply, is expected to further reduce the production cost of glass fiber yarn.

Investment Advice: We expect the company's net profit attributable to the parent for 21-23 years to be 5.8/7.0/830 million, maintaining the original earnings forecast, corresponding to the current share price PE of 12.6/10.5/8.8 times. The growth of the company's glass fiber business is expected to accelerate, the long-term growth is expected to be gradually cashed in, and the competitiveness in terms of industrial chain integration/product structure/cost is constantly improving, and the "overweight" rating is maintained.

Risk Warning: The sharp expansion of production capacity has caused an impact on the industry; demand is less than expected; energy costs have risen sharply; the acquisition of energy consumption indicators and capacity construction of enterprises are less than expected.

A total of 14 institutions have given ratings in the last 90 days, 10 buy ratings and 4 overweight ratings; the average target price of institutions in the past 90 days has been 27.66; the Securities Star Valuation Analysis Tool shows that Changhai Shares (300196) good company rating is 2.5 stars, good price rating is 3 stars, and valuation comprehensive rating is 3 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)