Wanhua Chemical (600309): A key step towards BASF in China

Wanhua Chemical (600309): A key step towards “BASF in China”

Recently, Wanhua Chemical Polyurethane Industry Chain Integration-Ethylene Phase II Project Environmental Impact Assessment was announced. The ethylene phase II project uses naphtha and mixed butane as raw materials. After 120 micron / year ethylene cracker production index, aromatics andDownstream products, mainly including ethylene cracking, cracked gasoline hydrogenation, aromatics extraction, butadiene, high density polyethylene, low density polyethylene, thermoplastics / elastomers, polypropylene and other devices, as well as supporting special engineering and auxiliary production facilities.

Our comments 1) The second phase of ethylene still follows the short-term process idea. It is large in scale and saves investment, but is different from the first phase decomposition. The second phase uses naphtha + mixed butane feed. Under the background of world-class refining capacity in coastal areasIt is expected that the excess of refined oil will suppress the price of naphtha in the future.

Under the anion plant multiple feedstock plan, the risk of dependence on imported light hydrocarbons is significantly reduced.

2) From the product side, after the implementation of the second phase of ethylene, the company’s petrochemical business realized the development from diene to triene tribenzene.

The planning is still mainly, but the pyrolysis gasoline hydrogenation supporting aromatics extraction, pure benzene and toluene extraction can be partially self-sufficient in the future; the conversion elastomer / plastic body (POE / POP) is the bright spot, large replacement space, high barriers, can be significantImprove ROE of petrochemical 南京夜网 business.

3) Large-scale petrochemical business is still an effective way to solve the company’s overly singular dependence on MDI. Compared with the incubation period in which new materials need to be involved, additional investment projects can realize the stepwise growth of revenue volume and profit more quickly.

Regarding the market’s doubtful competitiveness, we believe that the company has not pursued the absolute cost advantage of every detail in the process of integration and diversification. For the company at this stage, it has no longer surprisingly won and has grown into a world-class chemical industry.The company only needs time to resolve.

The company’s second-phase ethylene project plan validates our point of view again, that the catch-up path for chemical companies is to start with large petrochemical plants and become bigger, so that they can gradually develop their strength toward high-end special materials.It is an important step for Wanhua to make progress towards “BASF China”.

Investment suggestion: MDI prices are under short-term pressure under the sluggish demand, and the company’s long-term growth trend will not be changed. The profit forecast for 2019-2021 will be maintained.

2/125.

5/150.

2 trillion, corresponding to EPS are 3.

35/4.

00/4.

78 yuan.

Continue to be optimistic about the company’s further diversification and internationalization, and maintain the “overweight” rating.

Risk warning: macroeconomic fluctuations, raw material price fluctuations, new production capacity exceeds expectations.