Wanhua Chemical Company announced: The maintenance of the 600,000 tons/year MDI integrated device in Yantai Industrial Park has been completed and normal production has resumed. This set of equipment was originally scheduled to be inspected for one month from September 20, but a buffer tank burst on the first day of the inspection, causing the resumption of production to be delayed. During this period, Wanhua’s Ningbo MDI device is in high-load production to ensure that market supply is not affected. 455 million yuan was invested in the construction of the butyl material project, with a production capacity of 10,000 tons/year after completion; 145 million yuan was invested in the polyurethane adhesive expansion project, with a total production capacity of 10,000 tons/year after completion.
MDI prices remain high, and aggregate MDI prices hit new highs. Although the off-season is coming, supply is still tight due to low downstream inventory. The current market price of polymerized MDI has risen to 20,500 yuan/ton, a new high since 2012. The price of pure MDI has risen to 24,750 yuan/ton, and the MDI-aniline price difference is 16,775 Yuan / ton. Wanhua plans to overhaul a 400,000-ton/year unit in Ningbo Daxie starting from December. The maintenance will take one month. Another 800,000-ton/year unit will be overhauled in early 2017. Since there is basically no new production capacity put into operation on time in 2017, coupled with the post-cyclical demand for real estate, it is expected that MDI prices will remain at a high level and profits will continue to be good.
PDH equipment is operating smoothly, downstream equipment is operating stably, and the profitability of the industrial chain continues to improve. The price of isobutyraldehyde continues to rise, polyester production is stable, and the year is approaching, and downstream stocking is active. At present, the sponge factory has started operations compared with the previous listing, the procurement of raw materials for the polyether factory is stable, and the price of cyclopropane has also rebounded slightly. For acrylic acid and esters, as crude oil and propylene have been consolidating at high levels, manufacturers have pushed up prices, and downstream purchases are on demand, and the off-season is not weak.
The six major business divisions are growing rapidly and will become a new growth point for the company’s future performance. The six major business divisions mainly produce products with faster growth and higher added value in industries such as TPU, SAP, PC, special amines, water-based coating resins, and modified MDI. With the further release of production capacity in the future, the profit of this module will account for an increasingly higher proportion of the total profit. The company’s new material products have undergone long-term research and development and will gradually enter the harvest period in the future. It is expected that the profit CAGR of the six major business divisions will reach 40% in the future.
Profit forecast and investment rating: The profits of MDI and petrochemical products continue to improve, and the new materials business has good market prospects. Maintain profit forecast and maintain “overweight” rating. The EPS from 2016 to 2018 is expected to be 1.48, 1.83, and 2.13 yuan, and the current stock price corresponds to the PE of 14X, 11X, and 10X 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|solidamineetc., Suitable for end products such as sponge, molding, high resilience, self-skinning, PU toys and various hard and semi-hard foams.
