Net profit soared 39 times in the first three quarters! What is the growth secret of Jiangsu Thorpe?

On October 21, the acetate leader Jiangsu Thorpe (600746. SH) publishes performance reports. In the first three quarters of 2021, Jiangsu Thorpe achieved revenue of 5.857 billion yuan, an increase of 132.33% year-on-year; achieved a net profit of 2.15 billion yuan, a year-on-year surge of 3940.24%.

From a single quarter point of view, Jiangsu Thorpe's net profit in the first quarter increased by 1034.38% year-on-year, the net profit in the second quarter increased by 2521.4% year-on-year, and the net profit in the third quarter increased by 1344.87% year-on-year.

With the soaring performance, Jiangsu Thorpe has become a "fragrant feast" in the eyes of institutional investors, many funds, securities companies, and private equity

Following admission.

It is worth mentioning that in recent years, Jiangsu Thorpe has been on the verge of loss for many times, but the performance of the first three quarters of 2021 has increased significantly, with a growth rate of up to 39 times. At the same time, in the secondary market, the company's stock price has soared from a low of less than 6 yuan at the beginning of the year to a high of 25.62 yuan, with a cumulative increase of more than 3 times. Although the stock price has been slightly adjusted recently, the cumulative increase in stock prices this year is still eye-catching.

So, what is the growth secret of Jiangsu Thorpe?

Acetic acid prices soared Performance increased 39 times

According to the data, Jiangsu Thorpe was mainly engaged in the ADC blowing agent and chlor-alkali business in the early days, and after its listing in 1996, the company lost money several times, in order to improve profitability, in 2015, it first planned to acquire the acetic acid assets of Thorpe Group (Note: Jiangsu Thorpe's major shareholder), but it ended in failure.

In 2018, Jiangsu Thorpe restarted the acquisition of acetic acid assets and completed the asset restructuring in December 2019. Since 2020, Jiangsu Thorpe has transformed into a chemical enterprise with acetic acid and derivatives as the core. In 2020, Jiangsu Thorpe's revenue from acetic acid and derivatives accounted for 83%.

It is reported that acetic acid (also known as acetic acid) is an important organic chemical raw material, which can be derived from vinyl acetate, phthalic acid (PTA) and other products, which are widely used in textile, light industry, chemical industry and other fields.

The injection of Jiangsu Thorpe's acetic acid and derivatives business has clearly led to performance growth. According to the financial report, Jiangsu Thorpe's net profit in 2018 was 3.583 million yuan, with a loss of 5.637 million yuan in 2019; in 2020, it achieved a turnaround and a net profit of 231 million yuan, an increase of 42 times year-on-year.

Entering 2021, Jiangsu Thorpe development seems to have entered the fast lane, with a net profit of 1.504 billion yuan in the first half of the year, an increase of up to 176 times year-on-year, and was once named the "king of semi-annual reports", which completely pulled Jiangsu Thorpe out of the quagmire of years of sluggish performance.

The performance of Jiangsu Thorpe rose sharply, thanks to the sharp increase in the price of acetic acid and derivatives of the main product.

Since the end of 2020, the price of acetic acid has risen all the way. Business agency market data show that the annual price of acetic acid in 2020 is 2710 yuan / ton, soaring to 7900 yuan / share in April 2021, and the price of acetic acid exceeded 9000 yuan / ton on October 8. However, after breaking through the high point of 9000 yuan / ton, the recent acetic acid price has a downward trend, as of October 25, the price of acetic acid is about 7250 yuan / ton, and the corresponding Jiangsu Thorpe's recent stock price has also fallen from the highest point of 25.62 yuan all the way to 16.38 yuan (October 25 closing price).

There are three main reasons for the rise in the price of acetic acid: First, with the expansion of downstream PTA, EVA and other production capacities, the domestic demand for acetic acid continues to increase, while the export volume has increased significantly.

Second, the unstable start of acetic acid enterprises at home and abroad has led to a shortage of acetic acid supply. In recent years, there have been fewer new acetic acid production units, and most of the acetic acid units have aged and frequent failures; in overseas markets, there are also a number of acetic acid manufacturers affecting parking due to cold waves this year.

Third, affected by the "double control" policy, some domestic acetic acid manufacturers have stopped working, and the market capacity supply is insufficient.

It can be said that in the past year, whether from the supply side or the demand side, the acetic acid industry has maintained a high degree of prosperity.

It is worth mentioning that in the case of frequent maintenance and parking of acetic acid devices at home and abroad, and the supply is limited, Jiangsu Thorpe seized the opportunity to increase investment in safe production, completed the provincial secondary safety standardization renewal, and implemented 84 technical transformation projects such as safety improvement, environmental protection improvement, intelligent improvement, cost reduction and efficiency increase.

In addition, the industry barriers of acetic acid are high, there are certain requirements for technology, capital and upstream and downstream supporting, etc., and the domestic production capacity is more concentrated, and the market share of the top five enterprises in production capacity is more than 50%. At present, Jiangsu So has a production capacity of 1.2 million tons of general acetic acid, ranking first in the country and third in the world. As a leader in the acetic acid industry, Jiangsu Thorpe took the lead in eating meat, which is another important factor for the company's performance to be greatly improved.

Funded by all

The author noted that from the beginning of 2018 to the end of 2020, the trend of the stock has been "not prominent", and the stock price has been hovering between 6-8 yuan for a long time, and the lowest fell to 4.86 yuan.

Benefiting from the high prosperity of the acetic acid industry and the substantial improvement in performance, in 2021, Jiangsu Thorpe's stock price soared from a low of 5.7 yuan in early January to a historical high of 25.62 yuan on August 30, with a cumulative increase of 316%.

However, since entering September, Jiangsu Thorpe's stock price has fallen, with a cumulative decline of more than 32% in a single month. As of October 25, Jiangsu Thorpe closed at 16.38 yuan, up 0.55%, and the latest market value was 19.13 billion yuan.

In addition, with the growth of performance, Jiangsu Thorpe began to become a new focus of institutional investors.

In the first quarter of 2021, Boshi Houze and Shanghai Snowbo MicroSu Phase I Private Placement became the new current shareholders with 696,400 shares and 1,244,300 shares respectively, ranking ninth and fifth respectively, while Boshi Yuyi Fund reduced its holdings by 2,828,200 shares and continued to rank as the second largest liquid shareholder with 1,738,100 shares.

In the second quarter, new shareholders included Huaan Anshun Flexible Allocation Hybrid Securities, Huaan Exquisite Life Hybrid Securities, Huatai Securities, Huaan Anxin, Panjing Wenheng Private Equity, UBS AG, E Fangda Supply Reform, E Fangda New Silk Road and other institutions. Among them, E Fangda Supply Reform holds 12.511 million shares, and E Fangda New Silk Road holds 4.3465 million shares, ranking second and third largest liquid shareholders.

In addition to cemeteries, private placements, brokerages, etc., QFII also bought Jiangsu Thorpe this year, of which JPMORGAN CHASE BANK, NATIONAL ASSOCIATION bought 395,000 shares in the third quarter and ranked as the tenth largest liquid shareholder. UBS AG bought 1,913,600 new shares in the second quarter and reduced its holdings by 1,504,600 shares in the third quarter, still ranking the eighth largest liquid shareholder with 409,000 shares.

Suddenly, Jiangsu Thorpe has become the "new favorite" of many investment institutions.

Kaiyuan Securities believes that the new capacity of the acetic acid industry in 2021-2022 is less, and there will still be new capacity in the downstream of PTA and EVA in the future, which is optimistic about the long-term prosperity of acetic acid, and Jiangsu Thorpe as the industry leader or continues to benefit.

119 million unblocked shares are coming

At the time of double positive performance and stock price, Jiangsu Thorpe also has some hidden worries.

On September 30, Jiangsu Thorpe issued an announcement that 119 million shares will be lifted, accounting for 10.23% of the total share capital, and the time of listing and circulation is October 14.

The batch of 119 million unbanned shares was added from Jiangsu Thorpe on April 13, 2021, including 19.8556 million shares of Guotai Junan Securities, 15.6438 million shares of CITIC Construction Investment Securities, 14.8014 million shares of Caitong Fund, and 3.6101 million shares of UBS AG.

When the ban on restricted shares is lifted, it means that there may be a large number of stock selling in the market in the future, which will form a certain selling pressure, which may have a certain impact on the performance of the company's stock price in the secondary market.

On October 14, Jiangsu Thorpe closed at 16.15 yuan, down 7.77%, and then Jiangsu Thorpe's stock price has been fluctuating between 16-17 yuan.

It is worth mentioning that on August 16, 2021, Jiangsu Thorpe issued an announcement that in order to expand the layout of new materials, develop the downstream of the acetic acid industry chain and new material products, the company intends to acquire 100% of the equity of Jiangsu Dongpu New Materials held by Zhenjiang State Holdings. Dongpu New Materials has a production capacity of 200,000 tons/year of ion membrane caustic soda, 600,000 tons/year of sulfuric acid and other products, and is building a 50,000 tons/year chloroacetic acid project.

Kaiyuan Securities said in the research report that in the context of "two carbons", it is expected that the chlor-alkali industry will be prosperous for a long time. Through the acquisition of Dongpu new materials, Jiangsu Thorpe extends the industrial chain vertically to further improve the added value of products, and the future profit center is expected to rise, and it is optimistic about the comprehensive revaluation of the company's value.

Can Jiangsu Thorpe's performance continue to "drift red"? And we'll see!

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This article originated from Caihua Network