Huajin Stock (000059) Investment Value Analysis Report: Expansion of Refining and Chemical Production Capacity Adds New Boost to Butadiene or New Growth Point

Weapon Industry Group and Saudi Arabia set up a joint venture to reorganize and start again. Huajin is the only listed company in the petrochemical sector of China Weapons Industry Group. It has three major business sectors: petrochemicals, chemical fertilizers and road asphalt. It is a domestic large-scale refinery.One of the integrated petrochemical enterprises integrating chemical industry.

On February 22, 2019, the Ordnance Industry Group, Saudi Arabian Petroleum Corporation, and Liaoning Panjin Xincheng Group Co., Ltd. intend to jointly fund the establishment of Huajin Amei Petrochemical Co., Ltd. After the establishment of the joint venture, it will be responsible for the construction and operation of the Panjin City, Liaoning Province.Refining and chemical integration project. The project includes 1,500 tons / year of oil refining, 150 tons / year of ethylene, and 130 tons / year of para-xylene. It is expected to be commissioned in the second half of 2023.

In the future, the restructuring of the Group’s 1500 / year new refining and chemical base project will be completed. As the group’s only refining and chemical listed asset, the company’s refining and chemical business is expected to continue to benefit from the expansion of the group’s production capacity.

The upstream and downstream supply and demand pattern is getting better, but butadiene may become a new growth point. In 2018, the company’s butadiene business achieved gross profit2.

64北京桑拿洗浴保健 ppm, a 10-year increase3.

46%, profitability has gradually improved.

From the perspective of the structure of the butadiene industry, domestic butadiene by-products are unfavorable, and upstream production capacity is under pressure. In terms of downstream demand, natural rubber centralized harvesting inventory will be released soon, and synthetic rubber production will be adjusted in depth, inventory will gradually decline, and the rubber industry supply and demand layoutOr it will pick up.

The company now has 10 indicators per year of butadiene capacity and will fully enjoy the butadiene market dividend.

The refining and chemical industry’s economic climate is picking up. The new policy helps the industry to standardize the structure of oil prices. The oil price center continues to rise upward and the refining and chemical industry recovers. The company ‘s main petrochemical product spreads are at a relatively high level, and operating profit is expected to change.

In addition, the introduction of the new policy on refined oil consumption tax will gradually promote the phasing out of non-compliant backward production capacity, and the refining and chemical industry structure will be standardized.

The company will usher in a period of gold development when the refining market is improving and the supervision of refined oil consumption tax is fully strengthened.

The profit forecast and investment recommendations are aimed at the company’s refined industrial chain layout, and the butadiene industry’s supply and demand layout is improving.

We expect net profit for 2019-2021 to be 13.

15/16.

88/24.

76 trillion, corresponding to EPS are 0.

82/1.

06/1.

55 yuan.

Based on the relative estimation results, we give the company a target price of 8.

20 yuan, covering for the first time, give “overweight” rating.

Risk reminders: risks of raw material price fluctuations, industry growth risks, RMB exchange rate fluctuation risks.