This year is a big year for some basic chemicals and nonferrous metals, and many commodities have raised prices one after another.
In the rising cycle driven by terminal demand, profits continue to concentrate from the downstream of the industrial chain to the upstream. The main reason is that although the price of downstream products has also increased, with the synchronous rise in the price of upstream raw materials, the price difference between the operating income and operating cost of downstream manufacturers cannot be expanded, and even the gross profit does not increase but falls, and the result is that the income is not increased.
For example, we see that although they all have "lithium", the performance growth rate of battery manufacturers cannot catch up with lithium mines.
In terms of supply and demand, the downstream belongs to the manufacturing industry, and the expansion of production is relatively simple, while the upstream is limited by resource constraints, the pace of capacity growth is relatively slow, and the balance between supply and demand cannot be achieved in the short term, so the price increase is often higher than the downstream.
Of course, if it reaches the top of the cycle, the downstream production reduction is relatively easy, the upstream production line often cannot be stopped, and the pace of production reduction is also a slow-down process, which aggravates the oversupply, and the decline in raw material prices is often greater than that of terminal products.
As a result, the upstream is more cyclical.
Standing at the time of the full start of the cycle upwards, in accordance with the integrated layout, the method of product price increase cycle resonance, I previously shared with you the preparation of titanium dioxide and its by-product iron phosphate Ananda and the preparation of glyphosate and its by-product chloromethane (raw material for the preparation of silicone), and today share a halogen produced by its own salt mine, which is used to prepare sodium carbonate (soda ash) and its by-product ammonium chloride, and also use brine to prepare bisphosphate (intermediate of glyphosate), and then prepare glass raw sheets and coated glass with soda ash. In the future, there will be photovoltaic glass and module encapsulation, and the expected best of methionine production - and Bang Bio.
First, why is it a superlative?
1, this year's chemical market, countless times to verify that price increases are the strongest catalyst.
This year, the price of soda ash, the price of glass, the price of glyphosate, the price of ammonium chloride, the rise is a mess, all of which have been stepped on by Hebang, step by step.
2, in the leading position of the industry, in the cycle of the most profitable.
The diglyphosate business is the world's largest supplier; glyphosate is the domestic leader.
Last year, the output of ammonium chloride totaled 1.1905 million tons, ranking second in the country.
The largest soda ash manufacturer in the southwest region, located in Sichuan, a major soda ash consumer, has low transportation costs.
3, integrated industrial layout, raw materials self-supply, price difference brought about by price increases, are their own profits
The technical path of alkali production in Hebang adopts the joint alkali method, which produces ammonium chloride by-product, and each ton of soda ash produced can produce 1 ton of ammonium chloride by by-product.
The important raw material of the joint alkali method is synthetic ammonia, and The state can supply its own synthetic ammonia, and the current production cost of soda ash in Hebang is second only to Jinshan, Henan, with a single ton cost of less than 1,000 yuan. Today, the price of soda ash exceeds 2200 yuan, and the price of ammonium chloride, a by-product, has risen from 400 yuan / ton last year to the current 1200 yuan / ton.
An important raw material for the preparation of glass is soda ash, and the state is self-supplied.
The important raw material for the preparation of soda ash is brine (raw salt), and there are salt mines in the state, which are produced and supplied by themselves.
Second, revenue and profit calculation
Below, according to the layout of Hebang's production line, we classify and calculate this year's revenue and profit as detailed as possible.
First of all, carefully read Hebang's 2020 annual report and 2021 semi-annual report, and sort out the following outstanding issues: Call the company's investor relations department (the company's director's office).
The questions are as follows:
1. Is 100% of the brine produced by the company used as a raw material for the production of soda ash and bisphosphine?
2. What is the proportion of soda ash produced for the production of glass and export?
3. Are the 200,000 tons of double glycan phosphine exported? Are the raw materials used for the self-production of 58,000 tons of glyphosate included in the 200,000 tons?
4. What is the specification (thickness) of LowE coated glass? What is the average price?
5. Is the design capacity of methionine 70,000 tons? How much production is expected to be achieved this year?
6. According to the 2020 annual report, the company's target planned production capacity in 2021 is:
1.28 million tons of soda ash, 1.28 million tons of ammonium chloride, capacity utilization rate to 116.36%;
200,000 tons of double glycinate, capacity utilization rate to 133.33%;
58,000 tons of glyphosate, capacity utilization rate to 116%;
558,000 tons of original glass sheet, capacity utilization rate to 120%;
The coating production line is 6.4 million square meters, and the capacity utilization rate is 148.84%.
Can the above planned capacity be realized?
After communicating with the company, we begin our calculations.
(1) 1.28 million tons of soda ash, the average price in the first half of the year was 1900, and the current price was 2500. Capacity utilization rate 116.36%
This part of the output, a small part of the self-supply for the production of glass, most of the export. The specific export ratio is not mastered by the board office. We deduct self-use according to glass production 1:1, assuming that the export is 800,000 tons, the price is expected to continue to rise in the second half of the year, and the average price for the whole year is 2400 yuan.
The annual revenue was 800000 x2400 = 1.92 billion
(2) 1.28 million tons of ammonium chloride, dry ammonium prices rose from 600 / ton at the beginning of the year to the current 1200 yuan / ton. The average price in the first half of the year was 730 yuan. This part is exported, and the price is expected to continue to rise, with an average price of 1100 yuan for the whole year. Capacity utilization rate of 116.36%;
The annual revenue was 1280000 x1100 = 1.4 billion
(3) 200,000 tons of diglyphosphine. This part of the production, of which 87,000 tons are self-supplied for the production of glyphosate (glyphosate production is 58,000 tons, the output ratio is about 1.5:1), and the remaining 113,000 tons are exported.
The price of diglyphosate was not found, and we converted it according to the price of glyphosate 1.5:1. The average price of glyphosate in the first half of the year was 20600, the current price was 51500, which continued to be bullish, and the average price of the whole year was 45000 yuan / ton
Annual revenue of 113,000/1.5x45,000 = 3.39 billion
(4) 58,000 tons of glyphosate. All exported. The average price of glyphosate in the first half of the year was 20600, the current price was 51500, which continued to be bullish, and the average price of the whole year was 45000 yuan / ton
The annual revenue was 58000x45000 = 2.61 billion
(5) 2.1 million tons / year salt mine development, brine mining business: mainly as the company's double glycophosphate business, sodium carbonate (soda ash) business raw materials, but also supply the company's 49% of the Shuncheng salt for salt production.
After consultation and the bang dong office, a small part of this part of the production is also exported, but the specific proportion is unknown. In addition, the price of brine cannot be found, and the basic raw materials on the market are only raw salt, but the proportion of raw salt made of brine is not clear. Until I turned to the listing prospectus of Hebang, it stated that "the salt production of 10.5 bidding brine is about 1 ton, so the production capacity is 22 million bidding parties / year, and the salt is 2.1 million tons / year". So those 2.1 million tons are raw salt. As for the estimated export ratio, in view of the company's output of 1.28 million tons of soda ash, 200,000 tons of double glycanthate, and 600,000 tons of industrial salt and edible salt output of Shuncheng salt products per year, even if it is calculated according to the 1:1 calculation of raw materials and finished products, the 2.1 million tons of raw salt produced are few. Therefore, the income here is only calculated according to the 600,000 tons sold to Shuncheng.
This year, the national raw salt price increased slightly, the average price in the first half of the year was 256 yuan / ton, and the current price was 327 yuan / ton. The average price for the whole year is calculated at 300 yuan.
Annual revenue of 600,000 x 300 =180 million
However, Hebang also purchased finished industrial salt from Shuncheng Chemical in turn, where the procurement cost was no longer calculated separately, and it was also taken into account in the profit margin.
(6) 558,000 tons of original glass sheet, capacity utilization rate to 120%;
The original glass piece has not found the price, and the state dong office is not clear about the product specification distribution (glass is divided into 4mm, 5mm, 12mm specifications according to the thickness, each specification price is also different), temporarily calculated according to the average price of float glass spot, the average price in the first half of the year is 2050 yuan, the average price of the whole year is 2350 yuan / ton.
Full-year revenue was 558000 x2350 = 1.3113 billion
(7) Low-E coated glass production line of 6.4 million square meters, capacity utilization rate to 148.84%.
Low-emissivity coated glass is also divided into a variety of specifications, the product per square meter is between 35-75 yuan, and the bang dong office is still not clear about the product specification structure. We calculate it according to the average price of 45 yuan / square meter.
The annual revenue was 6400000 x 45 = 288 million
(8) 70,000 tons / year liquid methionine project, in 2020 to complete the linkage test, in December last year for commissioning trial production, the current engineering project is carrying out the last round of "elimination", is expected to achieve production standards in 2021, solidification.
The consulting and bang dong offices have not been consolidated as of today, so it is not clear what the expected production capacity will be this year.
According to the design capacity of 70,000 tons, it can be consolidated according to the fourth quarter for the time being, and it is estimated that the output will reach 20,000 tons this year
The price of methionine at the beginning of the year was 17730 yuan / ton, the highest at the end of March was 25000 yuan, the current price was 18200 yuan, and it was calculated according to the current price maintained in the fourth quarter.
Full-year revenue of 20,000 x 18,200 = 364 million
(9) Other items
a. 600,000 tons /year of industrial salt and edible salt of Shuncheng salt with 49% of the shares.
In 2020, Shuncheng's total revenue was 214 million yuan and its net profit was 19.64 million.
In the first half of the year, Shuncheng's revenue was 115 million yuan and its net profit was 7.52 million. The net profit for the full year is expected to be 20 million, attributable to hebang 10 million profit.
b. Israel S.T.K. biopesticides biopesticides, bio-veterinary drug business:
Loss, last year's loss of 78 million, the first half of this year's loss of 0.22 billion, the annual loss of 0.5 billion, holding 51%. Impairment provision of $133 million has been made.
c. Natural gas supply and pipeline transportation industry, oil sales, gas sales business:
Lack of data, the proportion of business revenue is not high, not counted.
(10) Projects under construction
Chongqing 8GW PV Encapsulation Materials and Products Project:
The first phase of construction of a 1,000t/d photovoltaic glass panel production line, a 900t/d photovoltaic glass backplane production line, a 2GW photovoltaic module production line, as well as supporting technology research and development centers, waste heat power stations, flue gas treatment systems, public works systems, etc.;
The second phase of the project is equipped with a 6GW photovoltaic module production line.
At present, the first phase of the project has started, the 1,000t/d photovoltaic glass panel production line is scheduled to be put into operation in June 2022, and the 900t/d photovoltaic glass backplane and 2GW photovoltaic module packaging project is scheduled to be put into operation in January 2023;
Panzhihua photovoltaic glass and module encapsulation project:
Construct a 60 million ㎡/year photovoltaic packaging materials production line and supporting the construction of 2GW photovoltaic module production line, a 52 million㎡ / year photovoltaic packaging materials production line, 6GW photovoltaic module production line and supporting technology research and development center, waste heat power station, flue gas treatment system, public works system, etc.
At present, it is in the process of preparing for the project and plans to start construction in fiscal 2022.
The above two projects under construction cannot contribute revenue this year according to the construction schedule, so it is not expected.
2021 Performance Summary:
Total revenue 19.2 + 14 + 33.9 + 26.1 + 1.8 + 13.113 + 2.88 + 3.64 = 11.4633 billion
Due to the different gross profit margins of each category, it is no longer measured separately, and the net profit is estimated at the overall net profit margin of 25% based on the equity and losses of the participating companies.
In 2020, the company's total revenue is 5.26 billion, and the profit attributable to the mother is 0.4 billion.
In the first half of this year, the revenue was 3.913 billion yuan, and the profit attributable to the mother was 914 million. Year-on-year growth of nearly 20 times.
According to the estimated annual profit attributable to the parent of 2.866 billion, this year's performance is expected to increase by more than 70 times year-on-year.
According to the price increase trend of major products, profits can still double next year.
3. Valuation analysis
The current market value is 27 billion, and the dynamic price-earnings ratio is 9.35 times.
The company's stock price has more than doubled year-to-date, but it is far from reflecting the level of performance growth, and the valuation is seriously undervalued.
Given the strong cyclical nature of product prices, it is not appropriate to use PEG valuation. It can benchmark Xinan shares with a dynamic price-earnings ratio of 17.6 times, and there is still room for at least double the upside.
The valuation of Xinan shares is also rising at the same time, so the market value growth space of Hebang Bio should be doubled, twice reasonable, and three times close to the top. In this cycle, the tight balance of supply will see at least the end of 2022. Even if the stock price reacts to cyclical changes in advance, the rally is likely to continue into the middle of next year.
Risk Warning
Personal analysis, it is inevitable that subjective bias, only as a review of cyclical enterprises to learn thinking, does not constitute investment advice. Do so at your own risk.