In The First Half Of The Year, Wanhua's Net Profit Fell Only 5 Billion 600 Million, And Its Performance Was Unsatisfactory.

In the evening of the first half of 2019, the Limited by Share Ltd, the largest MDI manufacturing enterprise in the Asia Pacific region, disclosed the annual report of the first half of 2019. During the reporting period, the company achieved operating income of 31 billion 539 million yuan, a decrease of 15.35% over the same period last year, a profit of 7 billion 22 million yuan, a decrease of 46.57% over the same period last year, and a net profit of 5 billion 621 million yuan attributable to shareholders of listed companies, representing a decrease of 46.49% over the same period last year. The reason for the change in net profit is that Wanhua chemical explained that the price of the company's main products in the MDI reporting period has dropped substantially over the same period. During the reporting period, the profitability of the company's products has been affected by the slowdown in global economic growth, the decline in the prices of main products and the increase in export costs.


The company will continue to strengthen production management, ensure the stable operation of the plant, and ensure the quality and quantity of the production tasks. In terms of sales management, the company will actively respond to the adverse effects of changes in the external environment on product sales, make an active judgement on the market development trend, formulate reasonable sales strategies, ensure sales and profit realization; in the aspect of research and development, the company will continue to carry out the optimization of the plant process to improve the efficiency of the plant and reduce the production costs, while strengthening the R & D investment of independent development projects and developing new technologies and products; in terms of management, the company will standardize the internal process and management system and adapt to the company's current situation and development goals, lay a solid management foundation for the company's strategy implementation, and strengthen the company's human resources management with the company's strategy, so as to reserve talents for the long-term development of Wanhua. Wanhua chemical said that in the second half of the year, in terms of production,


According to the industry, Wanhua is a leading chemical company in China. The core competitive product is polyurethane (MDI and TDI). The company is one of the few manufacturers with MDI capacity in the world. Wanhua chemical expanded to the petrochemical field and then entered the field of fine chemical industry, thus realizing the optimization of core business.


Zhu Jinqiao, an analyst at Gao Hua Securities, believes that the excellent planning and execution capability of Wanhua chemical in optimizing the production process and cost structure helps the company become the largest MDI supplier in the world. The business optimization is still its core competitiveness. Wanhua chemical has been focusing on the optimization of the plant, production process and cost structure through R & D and technological progress, so as to ensure production at the lowest cost. This strategy makes Wanhua's profit margin / roe stable at 40%/30%, thus providing a unique safety net for investors.


Zhu Jinqiao analysis, with the price of MDI and TDI both below the historical average, the public needs to see the actual demand growth (that is, sales growth and capacity utilization rate rise) will be more positive view of Wanhua transfer. The growth of sluggish macro data and terminal application sales (such as car sales) this year shows that demand growth is limited in 2019. Another driving force for sales growth, the new Yantai ethylene plant, will not be put into operation until the second half of 2020, and will only begin to make profits in 2021.


China Chemical leading products MDI prices continue to decline, dragging down the company's performance of the stage is not expected, but it is estimated that the price of MDI will be further limited, and the industry should not be overly pessimistic. This is because: 1) at present, the price of aggregated MDI and the pure MDI price are all near the bottom of 2005, considering the rigid support of production cost, and the price continues to descend very limited. 2) MDI can be used to produce soft foam, hard foam, paint and so on, and the downstream demand is closely related to fridge freezer, building materials, automobiles and so on. In summer, the consumption season of fridge freezer is strong, and the price level of MDI is strong. China Post Securities researcher Cheng Yimin said earlier that since the high point in 2017,


Cheng Yimin believes that in the short term, the current Wanhua chemical polyurethane performance contribution accounted for nearly 80%, which determines that in the case of relatively stable capacity of the company, the company's short-term performance will remain highly sensitive to MDI, TDI and other product market prices, to a large extent, to guide the market to judge its short-term performance expectations. In the medium and long term, Wanhua chemical in recent years to solve the single risk of products, increase the development of petrochemical, fine chemicals and new materials business, and low profitability in the early expansion stage, but provide industrial chain synergy. Later, the industry cycle mismatch will be used to improve the company's profitability stability, and partly resist the adverse effects of the periodical fluctuations of the polyurethane industry, and help enhance the valuation.


According to public information, the predecessor of Wanhua chemical was established in 1978 and went public in 2001. It is mainly engaged in R & D, production and sales of polyurethane series, petrochemical series, fine chemicals and new materials. In the 2017-2018 year, it became the most profitable A share listed chemical company outside of two barrels of oil.


Wanhua chemical is mainly engaged in polyurethane (MDI, TDI, polyol), propylene and its downstream PVC, acrylic acid, ethylene oxide, propylene oxide, styrene and other petrochemical products, SAP, TPU, PC, PMMA, organic amine, ADI, waterborne coatings and other fine chemicals and new materials R & D, production and sales. Among them, MDI is one of the most important raw materials for preparing polyurethane, and is one of the most important MDI suppliers in the world. With the completion of the first phase of Wanhua Yantai Industrial Park in 2015, Wanhua chemical has developed into a competitive supplier of polyurethane, petrochemical, fine chemicals and new materials.


Here, we learned that Wanhua chemical's MDI capacity is 2 million 100 thousand tons, accounting for 24% of the world's total. At the same time, the domestic production capacity of the new technology transformation is 800 thousand tons, and the foreign planning and construction capacity is 400 thousand tons. At the same time, starting from MDI, we will gradually expand TDI, 550 thousand tons of capacity, and a series of products such as 17%, ADI, polyether polyols, TPU and so on, so as to further enhance the profitability of the industrial chain.