Qi Xiang Tengda (002408) first coverage report: high-end projects start a new round of growth

Qi Xiang Tengda (002重庆耍耍网408) first coverage report: high-end projects start a new round of growth
Company profile: The company is a leading company in the carbon four industry chain, with production capacity of 20 cationic maleic anhydride, 18 molecules of methyl ethyl ketone, 35 molecules of MTBE, 20 molecules of isooctane, and 10 molecules of butane.After being tendered and acquired by the Cedar Group in 2016, it began a strategic transformation, developing a supply chain + industry chain to extend to the high end and becoming a new strategic goal.Three high-end projects are planned: 20 MMA, 70-terminal plug-in dehydrogenation and 30-inch catheter plug-in. It is expected to be put into production in 2020-2021.In addition, the company has reached a cooperation agreement with China Tianchen to build 20 Lier Nier in Zibo to effectively leverage the synergy of the industrial chain.  The traditional carbon four industry chain leader, the variety boom still has to wait 1) Methyl ethyl ketone: From 2019 to 2020, there is no supplementary production capacity at the supply side, and the growth rate at the demand side is likely to exceed the 2018 level, and it is expected that the profitability in 2019 will not be significantly improved; 2)Maleic anhydride: The supply side will maximize production capacity from 2019 to 2020. On the demand side, the environmental protection inspection facing the terminal glass fiber reinforced plastics and the chemical industry park brought about by the Xiangshui incident will be strictly rectified. It is expected that the profit of the maleic anhydride industry will be under pressure in 19-20 years.From the perspective of competition, the company’s carbon four industry chain is well-equipped, its cost advantage is obvious, and its profit margin is still better.  Focusing on the supply chain and escorting new growth engines The company has expanded its business globally by indirectly controlling Granite Capital SA.On the procurement side, the company is expected to purchase lightweight alkanes in the Middle East and the United States to further diversify the source of raw material procurement. In terms of storage and transportation, the company has established a subsidiary in Laizhou Port, Yantai City, and is actively building a coastal raw material storage base. On the sales side,Relying on Granite Capital SA, the company is committed to exporting its products to other parts of the world.  New projects promote growth 1) MMA: The original planned MTBE project of the downstream isobutane will be impacted by ethanol gasoline. The company will transfer the downstream isobutane to MMA through acquisition and expansion.And the carbon four method MMA technology barrier is high, the company’s acquisition of Heze Huali is one of the first to break through this technology company, enjoy good profits; 2) epoxy resin: domestic mainstream chlorohydrin method PO although the cost is relatively high, butThe production of intermediates will generate a large amount of wastewater and waste residue, and it is almost impossible to expand capacity in the future.HPPO starch has the lowest unit consumption, high conversion rate, and obvious environmental advantages.  3) Participation in the Adonier Project: The company’s oxidized dehydrobutadiene does not have a cost advantage and has always been a short board on the company’s relatively complete C4 industry chain.The company announced that it has reached the cooperation with China Tianchen for the adiponier project, which can digest butadiene products, give play to the synergistic advantages of the industrial chain, and is expected to take a share in the major breakthrough in adipinal production.  Profit forecast, estimation, investment rating, and profitability of the main products of the existing C4 industry chain are generally considered. Considering the company’s acquisition and consolidation in 2019, and new projects coming into operation in 20/21, the 19/20/21 net profit forecast is given.7.0/10.0/16.800 million, EPS is 0.39/0.56/0.95 yuan, the current corresponding PE is 19.4/13.6/8.1 times.  Target price 8 for the first time.6 yuan, and give “overweight” rating.  Risk reminder: Methyl ketone, maleic anhydride, butadiene profits further reduce risks; faster domestic technological breakthroughs lead to profit risks; the risk of PMMA profit recovery cannot be hedged; the company’s HPPO method technical route risks; the industry’s chlorohydrin method environmental protection requirements are relaxedRisks of technological breakthroughs in participating companies; risks of further increases in downstream real estate, automotive and other industries, etc.