Rongsheng Petrochemical (002493) Company Comments: The first phase of Zhejiang Petrochemical’s full-scale production is expected to make further profits

Rongsheng Petrochemical (002493) Company Comments: The first phase of Zhejiang Petrochemical’s full-scale production is expected to make further profits
The first phase of the Zhejiang Petrochemical Project was put into full production on December 30, 2019.The company issued an announcement that the holding subsidiary Zhejiang Petrochemical Co., Ltd. invested in the “4,000-ton / year integrated refining and chemical integration project (Phase 1)” refinery invested in the Zhoushan Green Petrochemical Base.Aromatics, ethylene and downstream chemical equipment have been put into trial operation, which has opened up the whole process, achieved stable operation and produced qualified products.The company announced on May 20 that the first batch of installations (atmospheric pressure reduction and related public works installations, etc.) were put into operation, marking the gradual announcement of the construction of the project; the hard struggle that lasted more than 7 months, and finally realized the entire refinery.The opening of the process marks that the project has entered the stage of full production.The company will further improve the debugging and optimization of relevant process parameters, and improve the production and operation level of the device.  The company’s profit is expected to rise to a higher level. The project will be put into production and improve the company’s reconstruction of the “crude oil-aromatics (PX), derivatives-PTA, MEG-polyester-spinning-textured” integrated industrial chain to achieve high-quality and efficientLarge-scale production, reducing product costs, further enhancing the company’s profitability, enhancing the company’s overall strength and anti-risk capabilities, and achieving leap-forward development; gradually achieving a certain degree of improvement in the right to speak in the aromatics and ethylene industries, and driving the midstream and downstreamProduction, processing and 杭州桑拿网 sales of chemical products to achieve the company’s economic and social benefits.  The company’s 19Q3 performance hit a record high in a single quarter. First, Zhejiang Petrochemical produced some fuel oil during the commissioning phase. In 19Q3, Sinopec’s raw materials shifted from outsourced to self-supplied. The reduction in the cost of major raw materials has a positive impact on the company’s performance.With the full-scale production of the first phase project of ZPEC, the company’s degree of integration has increased, and profits are expected to rise to the next level.  According to historical backtracking, the expected economic benefits of the first phase of the Zhejiang Petrochemical Project are better. According to the oil price, exchange rate, annual prices of major products and raw materials during the period 2013-2019, the profitability of the first phase of the Zhejiang Petrochemical Project is traced.During this period, the oil price had been above US $ 100 / barrel for a long time, and it was also at a low level of below US $ 30 / barrel. The prosperity of various chemical products has also been revolved, which can better reasonably allocate the profit range. The retrospective results show the expected economic benefits of the project.Company profit forecast, forecast and investment rating We maintain the profit forecast of the scale report. The company’s net profit for 2019/2020/2021 will be 42.2/78.6/89.100 million, corresponding to 18 respectively.3/9.9/8.7x, maintain “Buy” rating.  Risk reminder: PX-PTA-Polyester industry chain profit substitution, Zhejiang Petrochemical project profit exceeds expectations.