Wanhua Chemical (600309): MDI listing price increased again in March to improve demand and improve profitability

Wanhua Chemical (600309): MDI listing price increased again in March to improve demand and improve profitability

Event: The company issued 杭州夜网论坛 an announcement: starting in March 2019, Wanhua Chemical’s aggregated MDI distribution market in China listed at 15,200 yuan / ton, the direct market price was 15,500 yuan / ton; pure MDI listed price was 24,700 yuan / ton.

Comments: 1. The aggregate MDI distribution and direct sales prices increased by RMB 2,000 / ton last month, and pure MDI increased by RMB 1,000 / ton.

The company released its MDI listing price in March. The prices of aggregate MDI and pure MDI increased by RMB 2,000 / ton and RMB 1,000 / ton respectively, which is the first increase since September 2018.

At the same time, in March 2019, BASF aggregated MDI to implement dealer listing prices of 15,000 yuan / ton, up by 1,400 yuan / ton from the previous month.

We believe that the short-term supply of major suppliers is limited, and downstream 淡水桑拿网 supply after the holiday will bring a good situation of supply and demand, and prices are expected to continue to increase.

Wanhua Chemical resumed production in January, and all MDI units are now operating normally.

2. The prices have returned substantially since September 2018.

The fall of China’s MDI prices from the high point of 2017-2018 is a return to the fundamentals of supply and demand, and it is not necessary to be too pessimistic about the industry’s profitability.

The force majeure events in 2017 promoted the irrational growth of China’s MDI prices and will return to the normal level in line with fundamental support in the future. It is expected that the gross profit margin of MDI will increase by more than 30% in the next two years, and the profit margin will be much smaller than the drop in MDI prices.
3. Wanhua’s MDI production capacity continued to expand and perfected its layout.

TDI, MMA, PMMA and other products were successfully put into production.

The production capacity of Wanhua Yantai Industrial Park will be increased to 110 units / year, and the production capacity of Ningbo Industrial Park will be increased to 150 units / year. A total of 40 new MDI units and integrated supporting projects will be built in Louisiana, USA.

At this point, Wanhua will have production bases in three markets in Asia, the United States and Europe, to achieve layout.

The company’s 30-ton TDI, 5-minute / year MMA, and 8-ton / year PMMA will be put into production in 2019. The structure of multi-category products has been gradually improved, and integration and refinement strategies have been integrated. The execution of projects in the petrochemical field is reflected in C3 and C2Smooth progress of the industrial chain; Wanhua Chemical’s future growth path is very clear.

4. Maintain “Highly Recommended-A” investment rating.

Wanhua Chemical absorbed and merged Wanhua Chemical through issuing new shares, and the integration of high-quality assets was completed.

We expect the company’s expected earnings to be 3 in 2018-2020.

83 yuan, 2.

75 yuan (new equity), 3.

18 yuan (new equity).

The company’s subsequent construction of several heavyweight products has been smoothly advanced, maintaining the investment rating unchanged.

5. Risk warning.

The risk of the company’s MDI product prices falling sharply; the price of oil prices falling sharply; the market promotion of special chemical products reduces expected risks;