Cangzhou Dahua: Capacity Expansion To Enhance Future Profitability

Huaxing Chemical (002018) today, before the change, the trend of decline was rising, ending narrowed, closing up 4.81%, turnover rate 6.65%, the paction was enlarged.

As the market leader and forerunner of the pesticide industry, the company is in the stage of rapid growth.

The first half of 2008 announced that the net profit of the company will increase significantly in the 1-6 months of this year compared with the same period last year, and it is expected to increase by 550-650%.

Today's investment in online analysts shows that the company's 2008-2010 year comprehensive earnings per share forecast of Cangzhou Dahua (600230) rose against the market on Friday, the highest increase of 9.05%, and turnover of more than 3%.

The company is a listed company based on the production and sale of chemical fertilizer and other chemical products. The company has the annual production of 300 thousand tons of synthetic ammonia and 480 thousand tons of urea large-scale chemical fertilizer production line from the US Kellogg Inc and Holland, and the leading product "iron lion" urea has won the Title of national exemption product since 2002. Its products enjoy a good reputation in North China, Northeast China, and exported to Southeast Asia and other countries.

Today's investment in online analysts shows that the company's 2008-2010 year composite earnings forecasts are 1.02, 1.87 and 2.28 yuan respectively, corresponding to 17.5, 9.5 and 7.5 times the dynamic P / E ratio.

In recent years, the average annual demand growth rate of TDI in China is about 15%. In the next few years, the annual average demand growth rate of TDI can reach more than 30% under the influence of the demand for new waterborne polyurethane products rising downstream of TDI.

TDI has high technical barriers to production, and has certain advantages over MDI in terms of product usage. There are few TDI production enterprises in the country. The growth of TDI capacity of the company will promote rapid growth in performance.

The company's newly built 50 thousand ton TDI plant will be put into production by the end of this year. It is estimated that the company's TDI rights and interests in 08 years will reach 18 thousand tons, and 09 years and 51 thousand tons (at the end of 08), 50 thousand tons will be built by the company to set up a joint venture company to build 100 thousand tons of TDI projects, calculated according to 70% rights and interests. In 2012, because of another new project 100 thousand tons of TDI put into operation, the output of TDI will reach 151 thousand tons / year.

As the backing of the company, the urea business can contribute to stable profits.

Another main business of the company is urea.

In 2007, the output of urea in China was 54 million tons, and the export volume was 5 million 250 thousand tons, accounting for 9.7% of the total output, accounting for 15.2% of the global trade volume.

This year, 1~2 month Urea Export is about 1 million 700 thousand tons, of which only 400 thousand tons in February, has dropped sharply.

At present, the company uses natural gas to synthesize urea. Under the condition of rising coal, natural gas is used as raw material to synthesize urea, compared with coal head urea, the pressure of cost rise is slightly smaller.

Future Ltd's urea gross margin will remain relatively stable, providing a stable source of profits for the company's main business backing.

The company announced the mid-term report in 2008, which achieved operating income of 1 billion 150 million yuan, an increase of 32.45% over the same period last year, and achieved a profit of 290 million yuan, an increase of 35.85% over the same period last year, achieving a net profit of 149 million yuan, an increase of 44.39% over the previous year and a 0.577 yuan earnings per share.

In 2008 1-6, the company produced 16 thousand tons of TDI, 198 thousand tons of synthetic ammonia, 304 thousand tons of urea, 14 thousand and 100 tons of concentrated nitric acid and 17 thousand and 500 tons of porous ammonium nitrate.

The increase in the output of main products and the increase in the price of the company are the main reasons for the sharp increase in total revenue and profit in the first half of the year.

Galaxy Securities analyst Li Guohong believes that the rapid expansion of the company's subsequent capacity is the key to further rapid growth of future performance.

In February 2nd, Cangzhou Dahua Group and South Korea SK investment company signed a letter of intent to jointly build the China Cangzhou chemical industry base project.

The two sides plan to invest 50 thousand tons of TDI projects as the starting point for investment cooperation, and jointly build 100 thousand tons of TDI projects, 60 thousand tons of DNT projects, 160 thousand tons of caustic soda projects and 100 thousand tons of nitric acid projects.

Korea SK (China) investment company is the world's 500 largest enterprise, South Korea SK energy company's important chemical production enterprises, with the strong strength of chemical project construction.

Liu Wei, an analyst with Bohai securities, believes that the cooperation between the group and SK company will solve the fund problem for the group company, and will bring good management level to the company's long-term development.

Yan Zhu Jun, an analyst at Changjiang Securities, expects the company's TDI output to reach 30 thousand tons in 08 years. The new 50 thousand tons / year TDI project has been successfully put into operation 08 years ago. The 09 year operation rate of the device has reached 70%, contributing about 35 thousand tons of output. The production of 100 thousand tons / year TDI is not considered. The annual output of urea 08 and 09 is 550 thousand tons, and the gross profit margin is at a reasonable level.

Forecast Ltd's 08 years, 09 years and 10 years EPS were 0.866 yuan and 1.177 yuan respectively. At present, the stock price corresponds to 08 and 09 years dynamic PE is 24 and 18 times, and has a relatively safe valuation margin.

Risk factors: 1., a large number of TDI projects in the world, resulting in a sharp decline in its prices.

2.TDI raw materials toluene and other prices rose sharply.

Because of the overproduction of aromatics in the world, the risk of rising prices of toluene and aromatics is also small.

3. production safety accidents happen.

The value is 1.47, 1.97 and 2.57 yuan respectively, corresponding to the dynamic P / E ratio of 15.7, 11.7 and 9 times. Currently, 5 analysts have tracked, 3 analysts suggested "strong buying", 2 analysts recommended "buy" and the comprehensive rating coefficient 1.40.

Securities said the company's performance was largely due to the strong price of glyphosate.

Global demand for glyphosate is strong, and expansion will be constrained by increasingly stringent environmental policies and continued tight supply of raw materials, and a considerable portion of capacity will not be released.

In the first half of 2008, the demand for glyphosate was still strong and the price of the product remained high.

After preliminary calculation, the average price of the products in the first half of 2008 was about 82 thousand and 100 yuan / ton, while the average price of the product was about 33 thousand and 600 yuan / ton in the same period last year, and the average annual price in 2007 was about 46 thousand and 700 yuan / ton.

In April 2007, the company's 10 thousand tonnes of glyphosate projects were released, and the 15 thousand tons of capacity in the first half of 08 years were fully released, making the company's Glyphosate price rise, which greatly improved the company's profitability.

Changjiang Securities believes that the glyphosate series is still the main growth point of the company in the future, and the possibility of a big drop in glyphosate price is very small in the future.

In the second half of 2008 or at the end of the year, with the gradual release of related capacity, the price may be under some pressure, but it will still be supported by factors such as demand, cost and environmental protection. It is expected that the annual average price will be over 70 thousand yuan / ton.

Bank of China International says Chongqing project is the key to future development.

At present, the annual output of glyphosate is 15 thousand tons. The company plans to expand its annual capacity to 27 thousand tons by the end of 08.

In the future, the company is going to invest in the establishment of a subsidiary company in Chongqing to produce the main raw material, imino two acetonitrile, for the company.

The raw material is an intermediate product of glyphosate, and now the company needs to purchase from upstream manufacturers.

After the expansion project is completed, the company will become the first domestic glyphosate production enterprise with a complete industry chain.

The new plant in Chongqing can not only satisfy the company's demand for intermediate products, but also help to further increase the gross profit margin of the company, because the price of intermediate products has increased even more than glyphosate in the past year.

The joint venture company's first phase 20000 tonnes of DGP will be put into operation in the second half of 08.

The 20000 tonne project, which is commissioned by Adan and the company, will be put into operation in the second half of 08. This will enhance the company's performance in the second half of the year, thus laying a solid foundation for the high growth of the whole year.

The company is a comprehensive pesticide enterprise with core competitiveness.

At present, investors' attention to the company is mainly concentrated on glyphosate.

As a matter of fact, the structure of pesticide products is reasonable, and there are more than 20 products, more than 100 pesticides, herbicides and fungicides. The products are all in line with the national industrial policy, and there is no risk of being forced to be eliminated or restricted.

BOC is optimistic about the company's development prospects.

Risk factors: Although the company is constantly improving waste disposal technology, the company still faces pressure to control the rising cost of pollution.

Other risks include the current attractive price driving the rapid growth of the glyphosate industry, resulting in increased competition in the industry.