Yantai Wanhua: Continuous Expansion Of Production Capacity&Nbsp; Ushering In The Peak Demand Season

In 2009, the company realized business income 6.493 billion yuan, a year-on-year decrease of 15.72%; The total profit was 1.45 billion yuan, a year-on-year decrease of 30.09%; The net profit attributable to the owners of the parent company was 1.066 billion yuan, a year-on-year decrease of 31.15%; Earnings per share reached 0.64 yuan. A cash bonus of 3 yuan (tax included) will be distributed for every 10 shares.

The decrease in MDI price led to a year-on-year decrease in the company's operating income. In 2009, the average listing prices of pure MDI and aggregate MDI were 18108 yuan/ton and 15533 yuan/ton, respectively, down 27.30% and 31.22% year on year. The lower prices reduced the operating revenue by 15.72% year on year in 2009.

The company's production capacity continues to expand. At present, the company's production capacity is 500000 tons/year, and after Ningbo Phase II is put into operation, it will reach 800000 tons. After the company's headquarters relocation project is put into operation, the MDI production capacity will reach 1.2 million tons, ranking second from the fifth in the world at present.

The 2010 building energy conservation plan is expected to be issued, and polyurethane insulation board market potential Huge. At present, domestic polyurethane (MDI is an important raw material of polyurethane) accounts for less than 10% of the market share of building insulation materials, while developed countries in Europe and the United States account for more than 50%. Polyurethane has excellent performance in thermal conductivity, flame retardancy and other aspects, and has broad prospects. If the new and renovated buildings reach 65% energy saving standard, if polyurethane accounts for the entire new and renovated buildings Energy saving building 30% of the market share, the aggregate MDI annual new demand is 270000 tons, about 28% of the domestic demand in 2009, and the market potential is huge.

In April, the listed price of MDI increased significantly to meet the peak demand season. In April, the listed prices of the company's aggregate MDI and pure MDI were 18000 yuan/ton and 19400 yuan/ton respectively, up 800 yuan and 1000 yuan from the previous month. Polymeric MDI is mainly used in the thermal insulation field, such as refrigerators, solar water heaters, automobiles, etc. With the arrival of the peak demand season, the price is expected to rise; Pure MDI is mainly used for spandex, size, etc., which is closely related to textile and clothing. At present, the domestic demand for textile and clothing is strong. The export data of the first two months of this year also shows that the external demand is good. We believe that the improvement of demand will drive the price of pure MDI to rise.

Profit forecast and rating. We expect that the company's EPS in 2010-2011 will be 0.86 yuan and 1.09 yuan. Based on the closing price of 23.94 yuan on April 6, the corresponding dynamic P/E ratio will be 28 times and 22 times. Considering that the company has the concept of energy conservation and insulation, has obvious technical advantages, and gradually expands its business scope, maintaining the company's investment rating of "shareholding increase".

Risk warning. (1) There is price fluctuation risk of products and raw materials; (2) In the next two years, more MDI capacity will be put into production in China, and there will be risks that the downstream cannot fully digest: (3) The introduction and implementation of building energy conservation policies will not meet the expectations.