Shandong Haihua (000822) Research Briefing: Leading Ammonia-Alkali Soda Ash Leaders Seek Benefits, Industry Boom

Shandong Haihua (000822) Research Briefing: Leading Ammonia-Alkali Soda Ash Leaders Seek Benefits, Industry Boom

First, analyze and judge the leading enterprises of the ammonia-alkali method. The main product has significant synergistic effects. The company is one of the major domestic soda ash production companies. It is located in an important sea salt production area and has successively developed soda ash, raw salt and bromine around rich halides.Vegetarian products.

At present, the company has an ammonia-alkali method soda ash production capacity of 280 tons / year, and Sanyou Chemical both account for about 10% of domestic production capacity, CR5 is 36%, the industry concentration is relatively high; bromine production is about 600 tons / month, supporting other environmentally friendly products.
The company’s products rely on each other and have a significant synergy effect, which is of great significance for reducing production costs, resisting market risks, and improving competitiveness.

In the short term entering the traditional peak season, the soda ash inventory has a low price or an upward trend in the stocks of the soda ash industry has continued to decrease. The current inventory is only about 30, which is a change from the historical average of 50.

Since the middle and late March, domestic general soda ash enterprises have successively carried out maintenance, involving more than 20% of production capacity, and the market supply has continuously changed.

In addition, safety and environmental inspections will continue to be severe this year, and the production capacity in the Beijing-Tianjin-Hebei region may cause some impact.

At present, the price of light soda ash in East China is about 1,811 yuan / ton, and the weight of soda ash is 1,928 yuan / ton, which is at the historical center. The low level of inventory overlaps with rising demand. Soda ash may enter the peak season price increase channel.

The company has both the advantages of scale and the advantages of the recycling industry chain, and will fully benefit from the rebound in 四川耍耍网 the soda ash industry.

The long-term beneficiaries are tight in supply and demand, shifting thermoelectric assets to focus on the development of the main business. At present, the soda ash supply and demand relationship remains tightly balanced. From the perspective of the supply side, domestic soda ash production capacity has had almost no net increase since 2013.It is about 3000 pounds per year, and the operating rate of the industry is nearly 90%, which has basically reached the upper limit. Increasing production capacity in the future is still equivalent to replacing production capacity.

From the demand side, downstream applications mainly include glass, sodium silicate, alumina, inorganic salt chemicals and others, and consumption continues to increase.

At this stage, glass has perfect environmental protection facilities in production capacity, and its downstream real estate and automotive industry conditions have improved, with no significant slowdown in development; daily chemical demand has also maintained a high level.

A few days ago, the company decided to transfer 100% equity of Shandong Haihua Shengxing Thermal Power Co., Ltd., a wholly-owned subsidiary, and evaluated its equity value by using the asset-based method as 1.

6.9 billion US dollars, this will help the company optimize resource allocation, reduce operating costs, focus on the development of the main business, and lay a good foundation for future development.

Second, the investment proposal predicts that the company’s EPS for 2019-2021 will be 0.

72 yuan, 0.

77 yuan, 0.

83 yuan, corresponding to PE is 7 times, 6 respectively.

5 times, 6 times.

The reference SW soda ash sector currently averages 8.

6 times PE level, first coverage, given “recommended” rating.

Third, risk warning: downstream demand is less than expected; risk of exiting production capacity to resume production.