Chlor-Alkali Chemical (600618): Integrated operation of chlor-alkali enterprises awaits industry recovery

Chlor-Alkali Chemical (600618): Integrated operation of chlor-alkali enterprises awaits industry recovery

The company closed the Wusong Park and went light-loaded,北京桑拿洗浴保健 and the expense ratio dropped sharply. In the future, the company will focus on chlor-alkali business and continue to expand its production capacity.

After the prosperity of the chlor-alkali industry, the performance will generate explosive power.

Covered for the first time, giving a neutral rating.

Investment points: Neutral rating for the first coverage.

At present, the chlor-alkali industry is in a downturn, but after the company closed Wusong Park, the cost has dropped sharply. It is estimated that the EPS for 2019-2021 (the next three years) will be 0.

72, 0.

79, 0.

81 yuan, with a growth rate of -21%, 11%, and 2%; given a 19-year price-earnings ratio of 11 times, corresponding to a target price of 7.

92 yuan.

Leading chlor-alkali enterprises closed down Wusong Park and went light.

The company is a leading chlor-alkali manufacturer with comprehensive strength, and now has the production capacity of 72 units of caustic soda, 72 units of dichlorocarbonyl, 60 units of liquid chlorine, 8 units of pasty and special resins.

Production capacity under construction includes 20 toluene vinyl chloride expansion project and 20 alternative paste resin phase II projects, and the production capacity will continue to expand in the future.

In 2017, the company closed Wusong Park, the management costs were significantly reduced, the profitability was significantly improved, and the ROE level was higher than the industry average.

Integrated business operation model, breaking through the overseas monopoly chlorine cycle technology.

The company’s production base is in the Shanghai Chemical Industry Park, which can give full play to the synergistic effect of the upstream and downstream industrial chains, and work closely with international chemical companies to establish an integrated operation mode of supporting facilities and pipeline transportation in the chemical industry zone.

In addition, the company’s Deacon technology has entered the feasibility report preparation stage and has obtained 5 authorized patents. After the project is opened, it will break through overseas patented technologies, which can realize the chlorine cycle to reduce costs and expand the supply of chlorine to improve performance.

Wait for the chlor-alkali industry to pick up.

The main contribution of the company’s performance is to gradually burn alkali, accounting for 66% of net profit.

42%.

Since 2018, the downstream alumina industry has been in a down cycle and the liquid chlorine market has turned from weak to strong. From the perspective of the demand side and the balance of chlor-alkali, the price of caustic soda is lacking support.

In view of the close relationship between the demand for alumina and the real estate completion area, we expect the land completion area in the second half of the year may pick up, which will drive the alumina demand upward in a short cycle.

In addition, by improving the in-situ digestibility of liquid chlorine, the imbalance of chlor-alkali is expected to be eased, and the chlor-alkali industry will benefit.

Risk warning: the risk of sluggish demand and the risk of sharp price decline.