Wanhua Chemical: How to summarize 2018 and how to expect 2019?

On March 1, Wanhua Chemical (SH600309) released its 2018 Annual Results Report: The operating income of some of the former listed companies was RMB60.62 billion (compared with RMB53.12 billion in the same period last year), up 14.11% YoY;as one of the closest individual investors in the market for Wanhua Chemical Tracking, this performance was reported quickly, the author received a lot of inquiries. This article as a unified response, when the right to throw bricks to lead jade, failed or inadequate welcome the text after the article refers to the
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.01 million Huahua Chemical 2018: Cycle down slightly, absorbing consolidated thickening earnings per share Net profit of $15.566 billion (consolidated 2017 revenue of $64.84 billion, profit of $15.78 billion), BC Corporation and Ningbo Wanhua's 25.5 percent infusion of assets made a profit of $4.956 billion in 2018.3.14 billion shares of the combined share capital, earnings per share of 4.95 yuan. Seconds were 4071 yuan (11.13 billion profits, or 2.734 billion shares) per share in the same period last year.asset injection significantly increased earnings per share, the short-term increase in the Company's asset-liability ratio, calculated on June 30, 2018, the Company's asset-liability ratio will be increased from 49.22 percent before the statement to 58.58 percent, such as the official annual report of the asset-liability ratio is expected to be further reduced.summary: In 2018, the company's operating income increased significantly year-on-year and its earnings declined slightly, and the company's earnings per share increased by 21.6% after the issuance of fewer shares absorbed assets mainly from the combined Hungarian BC Company and Ningbo Wanhua's 25.5% shares.. The second half of the MDI main business cycle downturn short-term impact on the company's profits into the estimated Fourth Quarter net profit of Wanhua Chemical 1.59 billion, non-recurring profit and loss part of only 0.2 billion, gold content is very high.fourth quarter trade friction impact is positive, downstream destocking serious, Wanhua chemical-related products industry chain downturn, the main product polymerization MDI price was once less than 12,000 yuan; Diocyanate) device maintenance 28 days, 800,000 tons of MDI device overhaul 45 days (December 1 - January 14, 2019), in this case the company achieved such results is not easy.LPG trade volume, turnover of large companies Based on the data in the third quarter of 2018, LPG (LPG) trade completed about 1.816 million tons (2) in the first three quarters In the same period in 2017, 1.184 million tonnes, or 1.72 million tonnes for the year, an increase of 53.4% year-on-year, while LPG trade in the first three quarters exceeded that of the whole of last year and peaked in the fourth quarter, with revenue growth mainly due to the surge in LPG trade.In the future, with the completion of Wanhua Chemical's new 1.2 million cubic meters underground cave reservoir, the LPG trade portion will exceed 6 million tons, will thicken the company's revenue, improve the company's voice in the international LPG trade field, for the company's LPG industry chain to obtain long-term stability of low-cost raw materials to provide quality resources.LPG's trading portion made a profit of $178 million in 2017 and is expected to hit a new high in 2018. The rest of the revenue growth came from the production of 70,000 tons of PC, Zhuhai modified MDI and water-based coatings and other product contributions (including the original product line capacity increase contribution).(3) MDI recession cycle led to two consecutive quarters of decline in corporate earnings before the continuation of the industry boom cycle, Wanhua Chemical created 10 consecutive quarters of single-quarter earnings quarter-on-quarter, year-on-year growth, such growth is not sustainable, the company's performance fluctuates every quarter, should be the norm.fourth quarter tight balance into sufficient supply, downstream demand is not smooth, fourth quarter results like stress testing, calculated the extreme case of Wanhua chemical performance floor, greatly increased everyone's confidence.Before and after the Spring Festival holiday is generally the traditional off-season of MDI, the company's non-recurring profit and loss in the first quarter of 2019 may be poor, according to the previous year, the company subsidies and tax rebates and other large amounts included in the first quarter (the first quarter of 2018 this part of 326 million) overall first quarter earnings are still available.in March 2019, the aggregate MDI has rebounded from a low of about 3000 yuan, the current market price of about 15,000 yuan. According to the current polymer MDI of about 15,000, pure MDI of about 21,000 prices, Wanhua Chemical to play a cost advantage and capacity advantages, driven by other products, earnings are still beautiful, and after the table is expected to achieve more than 10 billion profits.the recession continue, below $10 billion? Not afraid, Wanhua Chemical's history will tell you that the next year Wanhua Chemical will double the blowout performance of the performance of the return.02 down cycle continues, Wanhua Chemical's short-term earnings will remain under pressure forecast 2019 earnings, the company's chairman, Dong Shi as unpredictable. history, Wanhua Chemical made 1.5 billion profits in 2008 and fell to 1 billion in 2009, rebounding to 2.9 billion in 2013 and 1.5 billion in 2015.
is under a lot of pressure to look at earnings in 2019, with aggregate MDI prices falling all the way down since June 2018, with september settlement prices below 1.5W and falling to around 12,000 in the following months. MDI accounted for more than 50% of Wanhua Chemical's revenue, profit contribution of more than 60%, MDI prices all the way down Wanhua Chemical's short-term earnings shrink. supply and demand determine the highest price in the market, and cost determines the lowest price in the market. Supply shortage market demand strong prices can rise suspicious of life, while downstream depression, sufficient supply, prices can continue to fall below most of the cost line of enterprises, and eventually some enterprises even went bankrupt. In the second half of 2018, Kostron CFO was promoted to CEO, with full MDI capacity, no cost-based sell-off, setting off a price war on the supply side (no cost advantage is doomed to fight soon, after all, cost determines the lowest price), according to industry sources. the fourth quarter of 2018 aggregate MDI price fluctuates around 1.2w, pure MDI price fluctuates around 2.1w, the current MDI price is not the worst situation, the worst situation of 2015-2016 aggregate MDI was once below 9500 yuan, pure MDI is less than 15,000 yuan. Historically, aggregateDIs have been running for 18 months under 15,000. really encounter such a long recession cycle again, Wanhua Chemical ROE (return on net assets) may fall below 20% in the short term; 03 2019 can expect profit growth point Yantai 600,000 tons of MDI in the second half of 2019 will be expanded to 1.1 million tons during the technical reform period, MDI business new capacity released, sales continue to improve. MDI recession cycle Wanhua chemical counter-trend expansion, greatly improve market share, penetration rate is the king. Aggregation MDI has stabilized at about 15,000 in March, up about 3000 yuan from the fourth quarter. MDI business volume to improve market share, improve profit contribution can still be expected December 29, 2018 Wanhua Chemical announced Yantai Industrial Park 300,000 tons of TDI (toluene isocyanate) project put into operation, Wanhua suddenly more than two Zhangzhou Dahua. Wanhua Chemical TDI technology is more advanced, lower cost, product quality is better. At the end of February 2019, the domestic TDI price fell below 13,000 yuan, the lowest price of 128,000 yuan, the price broke the cost line, Gansu Yinguang issued a strong market news: from now on will not accept the price of 13,000 yuan or less. this price, Wanhua Chemical's 2019 TDI business is as profitable as it is: Wanhua Chemical's new plant went into production that year, capacity utilization needs to be slowly improved, and the market needs to be nurtured. Overall, however, long-term capacity utilization rate increased, market share increased, Wanhua Chemical play the industry's lowest TDI technology cost advantage, others lose money, it can still be profitable. BC's TDI has been in operation for more than a decade, the century-old Eurofoam Group has 37 production sites in 12 countries, and Eurofoam Group is BC's largest customer. Quality advantage -
2019 Yantai TDI this section will thicken Wanhua Chemical revenue, expand the product line, short-term earnings can not be seen (follow-up TDI if stabilising a sharp rebound, the probability of profitability will be greatly increased), long-term earnings can be expected. This is the way to go before a new product can be put into production. heartache here, TDI is depressed again, 2015 TDI downturn, it has lost 2.07 yuan per share Oh. January 10, 2019, Wanhua Chemical announced that Yantai Industrial Park 50,000 tons / year MMA (methyl acrylates) project, 80,000 tons / year PMMA (polymethyl acrylates) project completed and put into operation, the output of qualified products. This section like thickening the company's revenue, expanding the product line, short-term can not lose, long-term profitability. 70,000-tonne PC project, which will start production in 2018, will operate steadily in 2019, and the profit contribution is expected to be further strengthened as capacity utilization increases. In the first quarter of 2019, Wanhua Chemical PC PHASE II 130,000 tons project is expected to be completed and put into operation, further thickening Wanhua Chemical's revenue and profit contribution. Zhuhai 100,000 tons of water-based surface material resin, 40,000 tons of modified MDI put into operation in July 2017, as of the 2018 semi-annual report is still a loss, new capacity utilization and marketing needs time, 2019 capacity utilization, as well as low raw material MDI prices, Zhuhai project is expected to be fully profitable. There are also expanded HDI, spa and other projects are listed in different. In 2019, Ningbo Wanhua University is likely to complete the evaluation of high-tech enterprises, the income tax rate is expected to be reduced from 25% to 15% (25% income tax rate in 2017, Ningbo Wanhua pays nearly 1 billion more taxes), the impact on the company's earnings is as great. above are the potential growth points for revenue and profits that can be seen in 2019. addition, the million tons of ethylene project under construction, the 400,000 tons of MDI project in the United States, and the subsequent 200,000 tons of PC polycarbonate project... These projects, which have been EIA, are under construction and are to be built with a total investment of more than 40 billion yuan, are expected to be put into operation in 2020 and beyond, and will no longer be listed. about the share price, investors are very concerned and want to hear my opinion. In this regard, I can only say that since the irrational decline in the stock price, Wanhua bottom rebounded by more than 57%, the short-term trend of the stock god can not be analyzed - investors who have read Buffett's shareholder letter this year know that his elderly family for "cookies" (Kraft Foods) investment experience tells us that good companies need to buy the same cheap. Moremore, short-term speculation and long-term shareholding claims are not the same, for a company with annual profits of more than 10 billion yuan, whether from asset investments or value speculation, too much attention to short-term share prices itself is not a thing of the past. to make a preview: about the core competitiveness of Wanhua Chemical, the market has a variety of interpretations, I also have my views on this. So in the near future, I'm going to write a separate analysis on this topic, published on the Alpha Field platform.