News summary

Environmental impact assessment of multiple key projects of Wanhua Chemical was announcedpooyan, plans to invest 17.6 billion yuan in constructionpooyan, covering important fields such as polyolefin elastomers and ethylene cracking devices. Demand for MDI, its main product, is picking up, and product prices in the petrochemical sector are rising. The company predicts stable growth in net profit in the next three years and maintains a "buy" rating.

Newsletter text

[Wanhua Chemical (600309) New Project Environmental Assessment Accepted, Project Investment and Construction Cycle Disclosure]

On May 16, 2024, Wanhua Chemical (Penglai) Co., Ltd.'s second phase acrylic acid and ester project and 400,000 tons/year polyolefin elastomer (POE) project have started environmental impact assessment acceptance work. The acrylic acid and ester project will add 160,000 tons/year of acrylic acid units and 400,000 tons/year of butyl acrylate units. It is expected to recruit 58 employees. The construction plan will start in May and last for 14 months. In addition, the second phase of the ethylene project located in Yantai Industrial Park is expected to cover an area of 1215 acres, with a total investment of 17.6 billion yuan, covering multiple installations and public works facilities. Construction of the 400,000 tons/year POE project has begun and is expected to be put into production by the end of 2025.

Wanhua Chemical's expansion in the field of new materials, through expansion in POE, citral, propane dehydrogenation, ethylene projects and MDI technological transformation and capacity expansion, is expected to put into production 200,000 tons of POE projects in the second and third quarters of 2024 respectively. and 4pooyan.80,000 tons/year of citral-flavors and fragrances project, which will further consolidate its leading position in the global new materials industry.

With the growth in demand for freezers and household refrigerators, the MDI market, the main product of Wanhua Chemical, has shown a recovery trend. Data shows that the average market price of polymeric MDI in the second quarter of 2024 will increase by 9% year-on-year, and pure MDI will increase by 0.0% year-on-year.pooyan.2%, while TDI fell 16% year-on-year. The supply side has contracted in the short term due to maintenance and force majeure factors, but the growth of the demand side has provided support for the MDI market.

Wanhua Chemical and Petrochemical segments and fine chemicals and new materials segments also show positive prospects. Higher oil prices provide cost support, and the prices of petrochemical products have rebounded, especially acrylic acid, butadiene, and styrene. It is expected that the newly commissioned petrochemical projects will have a positive impact on the company's performance.

The company's parent net profit forecast shows that 2024-2026 will be 19.384 billion yuan, 22.473 billion yuan and 23.337 billion yuan respectively, reflecting steady profit growth. Based on current stock prices, the P/E ratios are 14.4, 12.4 and 11.9 times, and the company maintains a "buy" rating.

However, there are also risks to the company's performance, including lower-than-expected project commissioning, rising raw material costs, and lower-than-expected growth in downstream demand.