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Shi Dashenghua (603026) Incident Review: Overseas Planning for New Capacity Solvent Leader Opens Growth Space

Shi Dashenghua (603026) Incident Review: Overseas Planning for New Capacity Solvent Leader Opens Growth Space
Event: The company issued an announcement that it plans to build a lithium-ion battery material project in Poland. It plans to establish a joint venture with PCCRokita. The company holds 51% of the shares. The first phase plans to invest in the construction. 2 The planned / year ethylene carbonate (EC) project. The estimated investment is 1.70,000 yuan, to build a 2-budget / year ethylene carbonate project, the construction site is Nizhny B?eg in the province of Lower Silesia, Poland, and the project construction period is 2 years. Key points of investment: Overseas planning for new capacity of lithium-ion battery materials opens up room for growth of solvent leaders.The company plans to invest in Poland to inject 2 ethylene carbonate (EC) production capacity. The oxide solvent is a carbonate mixture, and EC is an important component to improve the conductivity, accounting for about 20-30% of it.Leading battery factories such as Ningde Times, Samsung, LG Chemical, and other leading boiler manufacturers such as New Zebang and Jiangsu Cathay have plans to build factories in Poland. The release of new Polish solvent production capacity is an important layout of the company close to customer needs.At present, the company’s annual cumulative volume of carbonate-based solvent products is about 13-14 tons, of which battery-level products account for more than 40%. After the new capacity is implemented, the company’s battery-level product capacity will increase by 30-40%.The democratic market generally believes that the company’s production capacity is limited, and the future performance elasticity mainly comes from price, not volume, and growth potential is limited. We believe that the company is currently starting overseas production capacity layout and is expected to continue to invest in solvent production capacity such as dimethyl carbonate (DMC) in the future.The company’s strategic focus is obviously inclined to the new energy field, and long-term growth space is opened. In the future, solvents will maintain the situation of supply and demand disputes.In 2018, the price of solvents reached a record high. At the same time, the trend of DMC prices and raw material mixtures diverged. The demand-driven effect of price increases was obvious, resulting in a fundamental change in supply and demand. On the demand side, 1) New energy vehicles directly drive demand for battery-grade products. It is estimated that domestic battery-grade product demand in 2019 will be about 14-15 months (25-30% year-on-year); 2) Non-phosgene polycarbonate (PC) synthesisThe launch of new production capacity drove demand for raw materials DMC. In 2018, Lihua Yiweiyuan 10 was released to PC production capacity has been launched, driving 3 demand for DMC demand. Tianhuahua (10), Hubei Ganning (7), Shengtong Juyuan (13 inches) Total 30 counted into PC capacity is expected to continue to be released one after another, it is expected to drive 9 DMC demand; 3) DMC in traditional coatings, adhesives and other fields annual demand is about 25 months, total DMC demand in 2019 is about 50. On the supply side, the nominal capacity is far lower than the actual capacity. In the past few years, the DMC operating rate has been less than 50% for a long time. Even in 2018, the price and profitability reached a record high in 2018. The actual supply capacity is still only more than 40. The reason is partlyProduction capacity lags behind and is already in a state of elimination. Due to its own limitations, some production capacity cannot be fully produced.Recently, Taizhou Linggu 6 entered production capacity and will be completely withdrawn. New supply in 2019 will be about 8.5 Initially, there is uncertainty about the timing of production and the ramp-up of production capacity. It is expected that DMC will continue to maintain the funding seeking structure in the future. The short-term price of solvents has basically bottomed out, and gradually increasing the price of the hub will increase the spread of battery-level and industrial-level products.After the DMC price hit a record high in the fourth quarter of last year, the price of industrial grade products fell to 5,800 yuan / ton, mainly due to seasonal changes caused by industrial demand and load reduction.At present, the price of DMC has basically bottomed out. Considering the pace of demand release, we believe that the price of DMC will rise steadily, and the price center will gradually increase.The price of battery-level products is still at a relatively high level, and DMC offers 9,000-10,000 yuan / ton.At present, only battery-level products that can be stably produced in batches are Shi Dashenghua and Shandong Hike. It is expected that battery-level products will have a situation similar to last year’s difficult-to-find solvents by the third quarter. Industrial-level products need to be further purified to meet battery-level demand.We believe that the price difference between battery-grade and industrial-grade products will further widen, and the company’s battery-grade product profitability will further improve. The shareholder structure is optimized, and the transferee promises not to reduce its holdings, which is beneficial to the company’s sustainable stability.On January 10, the company issued an announcement agreeing that Beijing Zhehou would transfer Fosun Spectrum Run 5 through an agreement transfer.73% equity, and Shanghai Spectrum Run 2.42% equity, total transferee equity 8.15%, the transfer price is 20 yuan / share.On January 28, the equity transfer has been completed, Fosun Specrun no longer holds company shares, and Shanghai Specrun holds company shares1.48%, the transferee Beijing Zhehou holds company shares8.42%, and promised not to reduce holdings for 36 months.Shanghai Spectrum Run, Fuxing Spectrum Run are pre-IPO investors, facing product maturity reduction issues. For a long time, the company has merged. This time Beijing Zhehou transferred equity and promised not to reduce its holdings in order to stabilize the company’s ownership. Profit forecast and investment grade: The company plans new capacity for lithium-ion battery materials overseas, and the growth space of the solvent leader is opened.We believe that in the next two years, the supply of solvents will show a situation of oversupply. The short-term price will bottom out, and the price center will gradually promote the improvement, and the company’s profitability will further improve.New energy vehicles, polycarbonate synthesis and other fields show growth attributes. The company’s core competitiveness is outstanding. DMC has a broad market space. The company is a global leader in this field. Its production capacity continues to break. The company should be viewed from a growth perspective.Net profit is expected 北京夜网 to be 2 in 2018-2020.3, 3.3, 4.1 ppm, corresponding PE is 22 times, 15 times, 13 times, maintaining the “buy” level. Risk reminders: The company’s DMC product prices are lower than expected; new energy vehicle demand is lower than expected; polycarbonate import substitution is lower than expected; raw material cost risks; broad market systematic risks; overseas capacity progress is less than expected; overseas political risks are unfavorable.