Can Cangzhou Dahua Succeed In Surpassing Wanhua Chemical In This Area?

Perception, the unbridgeable gap between people; investment is the realisation of perception

Fundamentals.

Cangzhou Dahua after the two chemical restructuring by the China National Chemical Corporation Holdings, Cangzhou municipal government participation, the current market value of 7.5 billion. Note oh, here there is an asset injection imaginary space (chemical group quality assets, a large restructuring is completed, inevitably to internal integration. (Cangzhou Dahua has a small market capitalisation, a clean shell, and a new materials direction estimated to be in play.)

Cangzhou Dahua is mainly engaged in TDI (toluene diisocyanate) products, with an annual output of 150,000 tons of TDI, 160,000 tons of caustic soda and concentrated nitric acid, ammonium nitrate, etc.. Caustic soda and concentrated nitric acid and ammonium nitrate are mostly used for self-production and self-marketing due to their small contribution value and low market share, so we will not discuss these three products. Next, we will focus on three products that are expected.

1. TDI (toluene diisocyanate)

TDI is a commonly used polyisocyanate, and polyisocyanate is an important basic raw material for PU (polyurethane) materials.

According to the chemical stock investment logic, Cangzhou Dahua's TDI cost is not as high as Wanhua Chemical, and its production capacity is not as high as Wanhua, so there is not much room for imagination for Cangzhou Dahua in this aspect of TDI, and it can only be used as a purely cyclical stock to enjoy the premium of the product cycle, just like the 17-year polyurethane boom, Wanhua rose ten times, and Dahua also rose ten times; however, in the pullback, Wanhua continued to rise three or four times relying on the advantages of new materials, while Dahua has been falling from a high level until last year (understand the importance of chemical investment logic, right?), which explains why most of the old investors like the stability of Wanhua Chemical when playing the TDI theme, while the newbies like the flexibility of Dahua, exciting!

Referring to the late TDI production capacity of Dahua, TDI can be used as the base plate of market value of Cangzhou Dahua, at least to ensure that the market value is above 4 billion, no problem.

So Cangzhou Dahua TDI no need to waste energy researching a big push, play TDI follow the leading Wanhua on the line.

2、Bisphenol A

Bisphenol A (Bisphenol-A, referred to as BPA): phenol and acetone as raw materials, in acidic media through the condensation reaction to produce an organic chemical product, the chemical formula for C15H16O2. bisphenol A can be used to manufacture: epoxy resin, polycarbonate (PC), polysulfone resin, phenolic unsaturated resin, sub-ether amide, etc..

Cangzhou Dahua has 200,000 tons of production capacity to put into operation, 200,000 tons of bisphenol A in the domestic production capacity list can not enter the top five, so bisphenol A is not his explosive point, can only increase the earnings and improve some market value.

Bisphenol A is listed separately here because it is the raw material for PC manufacturing. According to public news reports, Cangzhou Dahua's 200,000 tonnes of BPA will be mainly used to supply the company's PC project. The company's production capacity of over 285,000 tonnes of copolymer silicon PC can be guaranteed. However, it is an interesting phenomenon that Dahua always likes to do some self-production and self-selling products, upstream and downstream integration, but the cost is not significantly reduced, which is also a reason for criticism, right?

3、Copolysilicon PC

At present, the global supply and demand balance of ordinary PC is slightly oversupplied, from the domestic competition pattern, the domestic polycarbonate production capacity of 1.76 million tons, the main in-production enterprises are:

With the domestic planning, proposed and under construction ordinary PC production capacity of more than 3 million tons, the future if these devices are completed and put into operation, will make the industry a serious overcapacity. Therefore, many domestic PC manufacturers are entering the PC modification field while improving the quality of their products.

Silicon copolymer polycarbonate (silicon copolymer PC) has excellent low-temperature resistance, as well as good flowability, crack resistance and anti-ageing, and is widely used in smartphones, 5G communications, new energy vehicles and photovoltaic connectors. Silicon modified PC material is an excellent choice for 5G antennas with its excellent wave transmission, weather resistance and low temperature flexibility.

China's silicon copolymer PC basically relies on imports, production technology and market are monopolized by foreign multinational companies, in 2007 SABIC acquired GE plastics business, become the dominant silicon copolymer PC market. At present, the silicon copolymer PC market is mainly occupied by SABIC and out of light, and SABIC a dominant, its market share of more than 70%.

Domestic companies such as Wanhua Chemical, Yinguang Juyin and Cangzhou Dahua have all laid out in the silicon copolymer PC. Among them, Wanhua Chemical relies on its own mature interface photogas polymerization process and silicone two industrial chain, to become the world's only one with a complete industrial chain of silicon copolymer PC suppliers, has for PDMS synthesis, silicon copolymer PC synthesis process, modified silicon copolymer PC and downstream applications from a multi-faceted approach, to start related work.

Cangzhou Dahua announced last year that it had developed and produced a copolymer silicon PC product and successfully commissioned the product in one go. The successful output of this product makes the company the first domestic enterprise to produce copolysilicon PC by continuous production method, which fills the domestic gap in this field and marks that the company has occupied the high point of copolysilicon PC technology, which greatly enhances the core competitiveness of the enterprise and forms a new profit growth point.

Cangzhou Dahua and Wanhua Chemical's copolymer silicon PC, their products contain 20% silicon and 6% silicon respectively. Dahua is backed by Sinochem, the process is continuous production method, the equipment bought from the United States, Wanhua is only modified, production costs have no advantage. Cangzhou Dahua is 100,000 tons capacity, Wanhua is currently 50,000 tons capacity, process Dahua is stronger than Wanhua, the cost is also.

It is known that the production cost of ordinary PC is about 15,000 a tonne, while the production cost and cycle time of copolymer silicon PC is less than ordinary PC. and Cangzhou Dahua PC raw material bisphenol A from self-supply, reference to Wanhua Chemical, ordinary PC bisphenol A unit consumption is about 0.875 million / tonne, special PC bisphenol A is about 0.7 million / tonne. Thus extrapolated, raw material self-supply + production costs, cycle time is lower than ordinary PC, Cangzhou Dahua copolymer silicon PC cost is conservatively estimated at about 12,000 / ton.

Based on the existing production capacity, with full production and full sales, 100,000 tonnes of copolymer silicon PC can contribute (40,000 - 12,000) x 100,000 x 0.75 tax ≈ 2.1 billion yuan net profit, based on ordinary taxation.

Based on the prospective production capacity, with full production and sales, 280,000 tonnes of copolysilicon PC can contribute (40,000 - 12,000) x 280,000 x 0.85 tax ≈ RMB 6.66 billion net profit, calculated in terms of taxation of high-tech enterprises.

Cangzhou Dahua is no match for Wanhua Chemical in TDI production capacity, no match for Rongsheng Petrochemical in Bisphenol A production capacity, and no match for Lucy Chemical in general PC production capacity.

The only advantage of Cangzhou Dahua is the domestic leading technology of copolymer silicon PC. Later, as the bisphenol A goes into production in the second quarter, it will help improve the copolysilicon PC industry chain, which can control costs and ensure profitability. This is why I began to emphasize the chemical stock investment logic: new technology or new process > cost > capacity.

To sum up: we look at TD I at the moment, then look at bisphenol A after it goes into production to bring PC incremental profit, just a few products in the cycle upward period.

Want to wait for the leap of Cangzhou Dahua, focus on the real mass production of Cangzhou Dahua copolymer silicon PC (this is also the reason why funds are afraid to go deeper, last year after the expectations and announcements out of the share price dried up three times, and then because there is no information on copolymer silicon PC in public information and statements, the share price has been consolidating.)

The annual report and quarterly report have copolysilicon PC profit information, then it is simple; still not, then continue to focus.