Company Announcement: The company announced 2018 annual results forecast. It is expected to achieve a net profit of 2.9-3.2 billion yuan (YoY+48.72%-64.11%), and its performance slightly exceeds market expectations. Among them, Q4 is expected to achieve a net profit of 5.49-8.49 billion yuan (YoY -37.47% - 3.30%, QoQ -13.00% - 34.55%). The year-on-year increase in the company's performance was mainly due to the transformation of new and old kinetic energy into an opportunity to implement energy conservation and consumption reduction in 2018. The devices maintained a long-term economic stable operation and maintained production and sales balance; caprolactam phase II, polycarbonate phase II, ammonia synthesis, gas The chemical furnace, hydrogen peroxide and other projects were successfully put into operation, and the industrial structure of the park was further optimized.


The prices of the main raw materials, bisphenol A and methanol, fell, and the price difference of some Q4 products expanded. According to our tracking, the average price of 32% ionic membrane caustic soda, formic acid, urea, caprolactam, 27.5% hydrogen peroxide, butanol, octanol, polycarbonate, and silicone Q4 are 924, 3285, 2078, 15240, 1205, 6920, respectively. , 8945, 17162, 21986 yuan / ton, the chain 18Q3 changes +1%, -28%, +5%, -11%, 0%, -12%, -1%, -22%, -34%; The raw materials showed a downward trend. The average prices of coal, pure benzene, propylene, bisphenol A and methanol were 628, 5820, 8566, 12398, 2788 yuan/ton, respectively, down 1%, 15%, 6%, 17%, 6 from 18Q3. %, the decline in raw material prices has increased the profitability of some products. The current prices of 32% ionic membrane caustic soda, formic acid, urea, caprolactam, 27.5% hydrogen peroxide, butanol, octanol, polycarbonate, silicone, pure benzene, bisphenol A, and methanol are 820, 2730, 1915, 12800, respectively. 880, 6800, 7700, 15950, 17200, 4700, 11800, 2130 yuan / ton, the main raw materials pure benzene, bisphenol A, methanol continued to fall, the overall profit is relatively stable.


The second phase of polycarbonate was successfully put into operation, and it is planned to expand production by 1 million tons to build a domestic leading. The company's second phase of the polycarbonate project was put into operation in November 2018. The company's PC capacity reached 200,000 tons, making it the second largest domestic manufacturer. The company is one of the first companies in China to achieve breakthroughs in polycarbonate technology. The second phase of the plant uses upgraded second-generation reliable technology to continuously improve product quality and reduce production costs. At present, the annual demand for polycarbonate is about 1.8 million tons. This year, the domestic new capacity is about 430,000 tons, which has a certain pressure on product prices. The company relies on advanced technology and the circular economy of the integrated park to enjoy certain cost advantages and still maintain good. The level of profitability. Luxi Chemical's polycarbonate green recycling integration project has been included in the key project planning of new and old kinetic energy conversion in Shandong Province and key construction projects in Shandong Province in 2019. The project plans to form 1 million tons of polycarbonate capacity. The company's capacity expansion is ahead of its peers, and leading companies are expected to take the lead in capturing the million-ton import substitution market.


The advantages of integration of the park are outstanding, and large chemical companies are in a rising channel of a virtuous circle. After years of development, the company has basically realized the transformation from traditional coal chemical enterprises to new chemical materials leaders. The Liaocheng Chemical New Material Industrial Park is the first batch of chemical parks in Shandong Province, and its integration, intelligence and intensification are leading the industry. . At present, the company is mainly engaged in the construction of 200,000 tons of formic acid, the retreat into the park integration project and the polyol raw material route optimization project (200,000 tons of MTO) are being promoted in an orderly manner, in which the ammonia and gasifiers in the retreat into the park project and The supporting public works have been put into operation. The retreat into the park project will expand the company's coal gasification capacity at the source. The release of gasifier capacity will realize the self-sufficiency of liquid ammonia and methanol supply in the park; after the methanol-to-olefin project is put into production, the raw material self-sufficiency of the company's polyol project will be realized. The current oil price center will achieve good profitability; new materials such as polycarbonate and formic acid will further improve the company's industrial chain layout, enhance the company's industry status, and become a new driving force for the company's future performance growth.


Earnings Forecast and Investment Rating: Maintaining the profit forecast for 2018-2020, it is estimated that the company's net profit attributable to the mother in 18-20 years is 29.00/32.58/35.09 billion yuan. The corresponding PE is 6/5/5 times and maintains the “overweight” rating.