Hua Lu Hengsheng (600426): Yu Shou’s strategy for the offensive

Hua Lu Hengsheng (600426): Yu Shou’s strategy for the offensive

In the past: Hard working internal skills, mining the ultimate Hualu Hengsheng became a new chemical enterprise with multi-industry joint production. The main business includes the production, sales, power generation and heating of chemical products and chemical fertilizers. The main products are fertilizers, acetic acid and derivatives, Organic amines, polyols, adipic acid and intermediates.

Since the company went public, its revenue and performance have grown rapidly.

From 2002 to 2018, the average annual compound growth rate of the company’s operating income was 24.

1%, the compound annual growth rate of attributable net profit is as high as 29.

9%, stand out in the bulk chemical industry.

Looking back on the development history of the past 20 years after listing in 2002, the company restructured to “expand production capacity + reduce costs and increase efficiency” → “product diversification + process depth optimization” → “stock game, leading accelerated expansion” road continues,Take off at three levels to achieve brilliant business results.

Analysis: Cost optimization, the industry’s leading coal chemical industry has little difference in the same product, and the competitiveness of different companies in the industry is mainly reflected in two aspects: scale and cost.

Since Hualu Hengsheng’s development history is not seriously out, the company has continued to develop in the continuous expansion of the industrial chain. This is similar to the thinking of the leading coal chemical companies in the same industry, but the company has achieved industry leadership.

The reasons are mainly due to the company’s cost optimization from multiple perspectives: (1) The foundation of standing: promoting technological innovation through research and development, helping the company to achieve a “one-end, multi-line” flexible production system; (2) raw materials: usingBituminous coal saves costs, and self-built railways improve transportation efficiency; (3) Labor: Encourage employees to increase productivity and optimize personnel efficiency with leading industry budget levels and fair incentives.

The future: product upgrades, the pursuit of growth in the long run, the company has built a clear foundation for competition. In the future, by expanding the existing product scale, upgrading the product series, and strive to continuously replicate success and achieve great development.

The 夜来香体验网 implementation of adipic acid, caprolactam, nylon 6 and other projects currently under construction is expected to become a new driving force for the company’s rapid growth: (1) The company’s existing technical level and cost control of adipic acid products are at the forefront of the industry. The company intends to rely onExisting technology and cost advantages, implement refined adipic acid quality improvement projects, carry out technological upgrades to achieve high-end products, enter the first echelon of the industry; (2) the caprolactam-nylon 6 project relies on the company’s existing gasification platform, whichThe use of synthesis gas resources and the exploration of high value-added applications of synthesis gas as the starting point, the development of the cyclohexanone-caprolactam-nylon 6 (polyamide) chip industry chain to create an integrated new material industrial base.

Maintaining the “Buy” rating is the domestic leader in coal chemical industry, relying on clean coal gasification technology to create a “one-head, multi-line” circular economy flexible multi-generation production operation model, optimizing product structure, and full of growth momentum.

The company’s EPS for 2019-2021 is expected to be 1.

48 yuan, 1.

60 yuan and 1.

72 yuan, maintain “Buy” rating.

Risk Warning: 1.

Downstream demand is less than expected; 2.

Projects under construction are progressing less than expected.