The average listing price of polymerized MDI in Q4 is 5,667 yuan/ton higher than that in the third quarter. Ningbo’s 400,000 tons/year MDI device is currently undergoing routine maintenance, and the price of polymerized MDI has reached a new high. . The average listing price of Wanhua polymeric MDI in the fourth quarter was 19,667 yuan/ton, and the average listing price of polymeric MDI in the third quarter was 14,000 yuan/ton. It is estimated that every 1,000 yuan/ton increase in MDI price can increase the company’s EPS by 0.33 yuan, indicating huge performance flexibility. The company’s Ningbo MDI Phase I unit (400,000 tons/year) was shut down on December 10 and is expected to undergo maintenance for about 40 days. The Yantai 600,000 tons/year plant and the Ningbo Phase II plant (800,000 tons/year) are operating normally. Although the off-season is approaching, due to low downstream inventory, supply is still tight. The market price of polymerized MDI has risen to 21,000 yuan/ton, a new high since 2012. The price of pure MDI is 23,000 yuan/ton, and the MDI-aniline price difference is 14,902 yuan/ton. tons. According to our calculations, the company’s current MDI gross profit margin exceeds 50%.
Demand is growing steadily, new production capacity will be limited in the future, and the oligopoly pattern will seize huge monopoly profits. MDI demand mainly belongs to the post-real estate cycle. Domestic MDI downstream is mainly used for refrigerators and freezers. The replacement life is generally about 10 years. Affected by the home appliances going to the countryside in 2008, it is expected that there will be a replacement peak in the next few years. The company’s MDI is mainly exported to the United States, where it is mostly used in the construction industry. Trump is strongly anticipating his massive infrastructure project, and is optimistic about the rapid growth in demand in the future. In 2016, the total global production capacity was approximately 7.6 million tons, of which half of the devices had been operating for more than 20 years, with high failure rates and low overall operating rates. Although there are new installations of 400,000 tons/year in the Middle East and 240,000 tons/year in Shanghai Lianheng in 2017, the products are mainly launched in the second half of the year and the load needs time to increase. It is expected that the new output will not be high and will be lower than the demand growth. High barriers and high investment allow the industry to maintain an oligopoly structure for a long time. After 2018, there is basically no new production capacity entering the industry. As a global leader, Wanhua has made huge profits.
The PDH unit is operating stably at full load, with profits exceeding expectations, creating a large petrochemical platform, and strongly entering the LPG trading field. The core of the petrochemical industry chain in Bajiao Industrial Park is the 750,000-ton PDH device. The propylene it provides is the raw material for subsequent acrylic acid, acrylic esters, coatings, and SAP. The operating rate of this device determines the overall operating rate of the petrochemical industry chain in the park. Since the second half of 2016, the unit has been operating smoothly and has basically been operating at full capacity. Wanhua Petrochemical Plant mainly uses 1.5 million tons/year of LPG as raw material. Its main products include acrylic acid, acrylate, propylene oxide, and MTBE. The prices have increased from 5,800, 7,100, 8,000, and 5,000 yuan/ton in June to 10,800 yuan/ton currently. 11,700, 10,950, 6,100 yuan/ton. Benefiting from rising crude oil prices and environmental protection inspections affecting the industry’s operating rate, product prices still have room to rise.
By extending downstream through the petrochemical platform, the six major business divisions have entered a period of rapid growth, with a CAGR expected to exceed 40% in the next three years. Utilize the raw materials provided by petrochemical projects to produce products with faster growth and higher added value in TPU, SAP, PC, special amines, water-based coating resins, modified MDI and other industries. It is expected to contribute a net contribution of 600 million yuan this year. Profit increased by 50% year-on-year. By 2018, the company will have 400,000 tons/year polyether, 120,000 tons/year TPU, 260,000 tons/year water-based coating resin, 200,000 tons/year PC, 120,000 tons/year SAP, and 30,000 tons/year ADI. With a special amine production capacity of 20,000 tons/year, the corresponding operating income exceeds 30 billion yuan, while the corresponding revenue this year is only 5 billion yuan. As the company’s new material products are put into production and increased in volume, the company has broad room for growth.
Profit forecast and investment rating: The profits of MDI and petrochemical products continue to improve, and the six major business divisions have huge room for growth. Raise profit forecast and maintain “overweight” rating. The EPS from 2016 to 2018 is expected to be 1.65, 2.07, and 2.51 yuan (1.48, 1.83, and 2.13 yuan before the increase), and the current stock price corresponds to a PE of 12X, 10X, and 8X from 16 to 2018.
() Deep cultivation In the segmented industry of polyurethane raw materials – amine catalysts; research, development and compound production of various types of amine catalysts; main products: A-33|33LV|CS90|C225|GSY9727|SMP| Z-131|solid amine, etc., suitable for sponge, molding, high rebound, self-skinning, PU toys and various A variety of end products such as hard foam and semi-hard foam.
