Wanhua Chemical (600309): Low MDI Price Optimistic for Medium and Long-Term Growth

Wanhua Chemical (600309): Low MDI Price Optimistic for Medium and Long-Term Growth

The company released the 2019 third quarter report: 485 revenue.

390 thousand yuan (YoY-12.

48%), operating profit 100.

2.4 billion (YoY-41.

20%) and a net profit of 82.

810,000 yuan, 78 net profit attributable to shareholders of listed companies.

9.9 billion (YoY-41.

75%); of which net profit attributable to mothers was achieved in the third quarter of 201822.

7.8 billion (YoY-25.

45%, QoQ-19.


The company’s polyurethane series achieved revenue of 240.

5.5 billion (H1 is 164.

8.4 billion), the petrochemical series realized income of 126.

3.8 billion (H1 is 75.

1.3 billion), the fine chemicals and new materials series realized income of 50.

3.8 billion (H1 is 32.

3.8 billion).

In the third quarter, MDI prices were sluggish, and mid-to-long term bullish prices returned to the historical center.

The company’s polyurethane product output was 198.

45 constant, 196 sales.

48 Initially, the average listing price of Q3 aggregate MDI (distribution) was 15,000 yuan / ton (H1 was 15,367 yuan / ton), and the average price of pure MDI was 20,800 yuan (H1 was 24867 yuan / ton).

Affected by weak downstream demand, the price of MDI has remained at a recent level.

However, from a global perspective, in the next two years, except for Wanhua, new capacity will be put into production and replaced, with high barriers and high input utilization industries to maintain the oligopoly to replace the layout.

In addition, Wanhua’s acquisition of Swedish Chemicals this year has expanded the company’s competitiveness and eliminated the market’s shift to new entrants brought by MDI technology transfer.

Petrochemical products are slightly worn away, and the ethylene project is progressing smoothly.

2019Q3, Shandong average price of propylene is 7749 yuan / ton (YoY-14.

70%); Shandong PO average price 9851 yuan / ton (YoY-18.

9%); Shandong butanol average price of 6423 yuan / ton (YoY-18.

35%); Shandong acrylic acid average price of 7336 yuan / ton (YoY-15.

7%); NPG East China hydrogenation average price of 8951 yuan / ton (YoY-35.


In terms of raw materials, the average CP price in the first half of the year was US $ 365 / ton, a decrease of 36.

89%; butane CP average price of 358 US dollars / ton, a decrease of 40.


The company’s ethylene project started construction in December last year and is currently progressing smoothly. It will increase the contribution to the petrochemical sector in the future.

Revenue from the fine chemicals and new materials 重庆耍耍网 segment continued to grow.

Sector revenue was 50.38 ppm, an increase of 20 in ten years.


The company’s second phase 13 forecast / annual PC production capacity is expected to be put into production by the end of 2019; the first phase of the annual production of 8 into the PMMA project was successfully started at the beginning of 2019 and produced the first qualified products; special isocyanates such as HDI, IPDI and other major global demand were nearly 30.Downstream is mainly automotive coatings and other fields. Wanhua’s products have been recognized by major customers around the world; the specialty amine business is also expected to transform into high-end wind power, electrical appliances, jewelry and other high-end epoxy resin areas for continued development and maintain rapid growth.

Profit forecast and investment rating: Due to the sluggish MDI price, the company’s performance has been weighed down, but the company’s new projects such as ethylene and new materials have steadily advanced, and it is expected to become a world-class chemical giant in the future.

Maintain “Buy” rating. Since the prices of MDI and petrochemical products have been slump since this year, Wanhua has suspended investment in US MDI projects, which is lower than our expectation. Therefore, it has lowered its profit forecast and expects EPS to be 3 in 2019-2021.

46, 5.

10, 7.

04 yuan (before the reduction was 4).

52, 6.

11, 7.

60 yuan), corresponding to PE is 12.

4, 8.

5, 6.

1 times.

Risk Warning: The prices of MDI, petrochemical and other products continue to fall, and new project progress is less than expected.

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