We have combed through the fluorine chemical industry in our series of industry articles, when the Kigali Amendment baseline year was coming to an end and the industry valuation was at historically low levels.
The fluorine chemical sector has been very active recently, with a cumulative fluorine chemical index of more than 25%, of which Sanmei shares not only carried the market in January, but also accumulated nearly 30% in the two weeks before and after the Spring Festival, breaking through the high point of 2021 in one fell swoop.
The main reason for the stock price ** is stimulated by the surge in the third generation refrigerant**, R143A** has increased from 1 in the past three months80,000 to 50,000. In addition, Juhua's acquisition of 51% of the shares of Feiyuan Chemical coincided with the management's support for the merger and acquisition of state-owned enterprises, which was interpreted as the beginning of the integration of the fluorine chemical industry.
1. Understand the fluorine chemical industry
Fluorine is one of the most chemically reactive elements in nature and is found in a variety of organic and inorganic substances. Fluorine-containing substances have the characteristics of high stability and good non-sticking. Due to the advantages of high performance and high added value, fluorine chemical industry is known as the "first industry" of new chemical materials.
Industrial chain and products
From the perspective of the industrial chain, the fluorine chemical industry chain originated from fluorite, fluorite powder and phosphate rock added to sulfuric acid to produce anhydrous hydrofluoric acid is the basic raw material for the preparation of fluorine-containing products, and the downstream fluorine chemical products are mainly divided into four categories: inorganic fluoride, fluorine-containing refrigerants, fluoropolymers, and fluorine-containing fine chemicals.
Inorganic fluoride: mainly fluoride salts and fluorides, which are used in coating, electrolytic aluminum, lithium batteries and semiconductors;
Fluorinated refrigerants: the main components are HFCs (hydrofluorocarbons) and HCFCS (hydrochlorofluorocarbons) substances, which are used in air conditioners, refrigerators, etc.;
Fluorine-containing polymer materials: mainly fluororesin and fluoroelastomers, which are widely used in electronic appliances, equipment manufacturing, construction and other fields; Fluorine-containing fine chemicals: mainly including fluorine-containing electronic chemicals, pesticides, pharmaceutical intermediates and other fields.
From the perspective of value, with the increase of product processing depth, the higher the technical threshold, the higher the added value of the product. The tonnage price of raw materials is hundreds to thousands, fluoroalkanes are about 10,000 yuan, fluorine monomers are tens of thousands of yuan, fluoropolymers are tens of thousands to hundreds of thousands, and fluorine-containing fine chemicals can be as high as millions of yuan. Electronic grade hydrofluoric acid is a high-end product of hydrofluoric acid.
2. Industry analysis
According to the "14th Five-Year Plan" development plan of China's fluorine chemical industry, the total production capacity of various fluorine chemical products in China exceeds 6.4 million tons, the total output exceeds 4.5 million tons, the total output value exceeds 100 billion yuan, the hydrogen fluoride production capacity accounts for 66% of the world's production capacity, the fluorine-containing refrigerant accounts for 70% of the world's production capacity, and the total production capacity of the four major fluoropolymers accounts for about 60% of the world's total, making it a major producer and consumer of fluorine chemical products in the world.
The domestic product layout is low-end, mainly hydrofluoric acid, HFCS refrigerant, injection grade PTFE and other products, while a large number of fluoropolymers and fluorine fine chemicals are still in the early stage of growth, fluoropolymers such as FEP and PFA are in the growth stage, and the fourth-generation refrigerant R1234YF is in the early stage of the introduction period. The long-term development direction of domestic fluorine chemical industry is to develop in the direction of deep processing and high added value.
1. Industry pattern
According to the Shenwan industry classification standard, the fluorine chemical industry belongs to the subdivision of the chemical products (secondary) industry under the basic chemical (first-class) industry.
The A-share fluorine chemical industry is relatively simple, with only 9 companies in total. In terms of valuation, the current industry valuation is 4255 times PE, 312 times PB, the industry quantile valuation is moderate.
In terms of scale, Juhua is the absolute leader, with revenue exceeding 20 billion yuan and profit exceeding 2 billion yuan in 2022. Polyfluoride and Haohua Technology are in the second echelon, with a revenue scale of about 10 billion; Yongtai Technology, Sanmei Shares, and Yonghe Shares are in the third echelon. In addition, Jinshi Resources is the upstream segment leader of the industry.
2. Refrigerant
Refrigerant is one of the four major product systems of fluorine chemical industry, and fluorine-containing refrigerant is a typical policy-driven industry, which is promoted by the international convention "Kigali Amendment" and is one of the few subdivisions with supply-side restrictions in the chemical industry in recent years.
At present, more than half of the second-generation refrigerants in China have been eliminated, and the third-generation refrigerants have gradually become mainstream products. 2020-2022 is a three-year quota competition period for third-generation refrigerants, and leading companies strive for a larger quota proportion by significantly expanding production. From 2018 to 2022, the domestic R32 production capacity increased from 2720,000 tons increased to 5070,000 tons, R125 production capacity by 2280,000 tons increased to 3220,000 tons, R134A production capacity increased from 320,000 tons to 3880,000 tons, and the production capacity concentration is high, CR5 is over 60%, of which Juhua shares, Sanmei shares, Dongyue Group, Sinochem Blue Sky, Yonghe shares and other leading enterprises occupy the main market share, similar to the second-generation refrigerant pattern.
The sharp expansion has led to overcapacity, and the profitability of product enterprises has declined. At present, the total amount control policy of the third generation of refrigerants has been implemented, the supply and demand pattern of the industry will gradually improve, the price increase cycle of the third generation of refrigerants will be opened, and the profitability of enterprises will also be improved.
3. Analysis
1. Juhua shares
The company is a leading refrigerant enterprise in China, and its production capacity and output are in the leading position in the industry. Historical performance is strongly cyclical.
From a risk perspective, the total cash flow from the company's operating activities for three years was 14381%, excellent performance; Goodwill value 01%, which accounts for a small proportion and is basically negligible; There is no pledge from the majority shareholder; Nor did the senior majority shareholder. The company's risk indicators are generally good, and there is no major risk.
From the perspective of operation, the company's operating income has an average growth rate of 13 years in three years22%, deducting the three-year average growth rate of non-net profit: 41133%, good growth.
In 2021, the company's performance of beneficiary products entered an upward cycle, and its performance in 2022 hit the best level in history. The company's net profit attributable to the parent company in 2023 is expected to be 90~10.600 million yuan, which is expected to decline by 55% to 62% year-on-year. The main reason is the decline in the main products.
Looking at valuations, the company currently trades at a rolling P/E ratio of 3014 times, in the middle and low range of the historical average.
Summary:
At present, the company is a leading fluorine chemical enterprise with a series of fluorine-containing refrigerants of the first to fourth generations in China, and the market position of the third-generation fluorine refrigerants and their mainstream varieties is leading in the world, with a total quota of 22 mainstream varieties (R125, R32, R134A, R143A, R227EA, R152A).40,000 tons, the industry accounted for 307%。
The company's strategy at this stage is to consolidate and enhance the market share of the third-generation fluorine refrigerant and expand the first-class fluorine refrigerant. With the official landing of the third-generation refrigerant quota, the second-generation refrigerant will gradually withdraw from the market, the supply of the third-generation refrigerant will begin to be limited, the industry will pick up, and the company's profitability will also increase.
2. Polyfluorine
Judging from historical performance, the company basically has no growth. In the past two years, benefiting from the rapid development of new energy vehicles, the company's lithium hexafluorophosphate price has risen to drive performance. Affected by the decline in products**, the company's net profit margin in the third quarter of 2023 decreased by more than 70%.
From a risk perspective, the company's total cash flow from operating activities for three years is 5063%, excellent performance; The proportion of goodwill value is very small and can be ignored; There is no pledge from the majority shareholder; Nor did the senior majority shareholder. The company's risk indicators are generally good, and there is no major risk.
From the perspective of operation, the company's operating income has an average growth rate of 52 in three years79%, deducting the three-year average growth rate of non-net profit: 122%, with excellent growth performance.
Finally, looking at valuations, the company currently trades at a rolling P/E of 2127 times, with a rolling price-to-book ratio of 173, all in the low area of the historical average.
Summary:
The company is a leader in lithium hexafluorophosphate, with a total production capacity of 85GWh, including lithium battery production capacity 7The production capacity of 5GWh and sodium batteries is 1GWh, and the current lithium hexafluorophosphate production technology is the most advanced cost control ability per ton in the forefront of the industry. In the first three quarters of 2023, a total of 25-3GWh, of which energy storage battery shipments account for more than 30%.
The company is one of the first batch of enterprises in China to break through the G5 hydrofluoric acid production technology and have a production line, with a production capacity of 60,000 tons of electronic-grade hydrofluoric acid, including 20,000 tons of semiconductor-grade hydrofluoric acid; The project with an annual output of 30,000 tons of ultra-clean and high-purity electronic grade hydrofluoric acid has also started.
3. Haohua Technology
The company, formerly known as Tianke Co., Ltd., has successively acquired 12 scientific research institutes under the group since 2017, and integrated the special gas sector of each institute to form Haohua Gas, and its performance has also increased year by year. There was a slight decline in performance in 2023.
High-end manufacturing of chemical materials, high-end fluorine materials, and engineering and technical services are the company's main businesses, accounting for more than 75% of revenue. High-end chemical materials include polyurethane, special coatings, nitrogen trifluoride, rubber sealing profiles, organic transparent materials and other products. In terms of high-end fluorine materials, fluoropolymer, fluoroelastomer and PVDF are mainly fluorine-containing materials. In terms of electronic chemicals, the company's existing production capacity of fluorine-containing electronic gases ranks among the top three in China.
From a risk perspective, the company's total cash flow from operating activities for three years was 4889% with excellent performance; The company has no goodwill; There is no pledge by major shareholders; In the past year, there have been no ** executive shareholders. The company's risk indicators are generally good, and there is no major risk.
From the perspective of operation, the average growth rate of the company's operating income in the past three years is 2297%, deducting the average growth rate of non-net profit of 1654%, good growth.
Looking at valuations at the end, the company's current rolling P/E ratio is 2222 times, PBLF of 292 times, all in the low area of the historical average.
Summary:
The company is backed by China National Chemical Corporation, has advantages in high-end chemical materials and high-end fluorine materials, and is currently acquiring Sinochem Blue Sky. Sinochem Bluesky is a leading third-generation refrigerant company, with R-134A and R-125 production and sales ranking top three in the world, and has fourth-generation refrigerant technology reserves. After the integration of Sinochem Blue Sky, the company has refrigerants and other related businesses.
In addition, the company Chenguang Institute 2The 60,000-ton fluorine material project, the 100,000 civil aviation tire project of Shuguang Institute, the sealing profile project of Northwest Institute, the special chemicals and special materials project of Liming Institute, and the special gas project will be released one after another in the year after tomorrow, and the company's growth will be ***
4. Yongtai Technology
The company's historical performance has also seen significant fluctuations, with a record high in 2022 and a loss in the first three quarters of 2023.
From a risk perspective, the company's total cash flow from operating activities for three years is 3021%, excellent performance; The goodwill value of the company is 1782%, which is not a large proportion; There is no pledge by major shareholders; In the past year, there have been no ** executive shareholders. There are no big risks in the company as a whole.
From the perspective of operation, the average growth rate of the company's operating income in the past three years is 1649%, deducting the average growth rate of non-net profit of 266%, the growth is good, but the current performance is in a downward trend.
Finally, looking at the valuation, because the company's current performance is negative, the current price-earnings ratio and other indicators are not indicative.
Summary:
The company's business spans the three major fields of lithium battery materials, medicine and pesticides, and the business with the largest revenue is **, accounting for 36%. It is said that it sounds good is diversified, and if it is not good, it is that the main business is not focused enough.
5. Sanmei shares
The company is a leading refrigerant enterprise in Zhejiang Province, and its performance declined in the year of listing in 2019. The third quarter report of 2023 showed a 48% decline in profit.
From a risk perspective, the company's total cash flow from operating activities for three years is 2005%, excellent performance; The company has no goodwill value; There is no pledge by major shareholders; In the past year, the executive shareholders **091%, a smaller percentage. There are no big risks in the company as a whole.
Judging from the operating data, the average growth rate of the company's operating income in the past three years is 1229%, deducting the average growth rate of non-net profit of 55%.
Finally, looking at valuations, the company's current rolling P/E ratio is 7739 times, in the high area of the historical average.
Summary:
The company is a leading enterprise in the integrated layout of fluorine chemical industry, and the upstream supporting hydrofluoric acid forms a cost advantage. The fluorine refrigerant business accounts for nearly 8 percent, and with the third generation of refrigerant as the core product, the performance will be more flexible in the first time.
6. Jinshi resources
Fluorite, also known as fluorite, is a crystalline of calcium fluoride (CaF2). According to the "Twelfth Five-Year Plan for the Development of China's Fluorine Chemical Industry", fluorite is a world-class scarce resource similar to rare earths.
The company has built an integrated industrial chain layout of "fluorite-fluorine chemical-new energy". The company's fluorite resource reserves are basically stable at 27 million tons of ore, and the corresponding mineral volume is about 13 million tons, making it the largest enterprise with resource reserves, mining, production and processing scale in China. Benefiting from the rise in the volume and price of fluorite products, the company's performance is expected to increase by 50%-70% year-on-year in 2023.
From a risk perspective, the company's total cash flow from operating activities for three years is 705%；no goodwill value; The pledge ratio of major shareholders is 1617%, a smaller proportion; In the past year, senior management shareholders increased their holdings by 05%。There are no big risks in the company as a whole.
Judging from the operating data, the average growth rate of the company's operating income in the past three years is 2452%, deducting the average growth rate of non-net profit of 1522%, with average growth.
Looking at valuations at the end, the company's current rolling P/E ratio is 1639 times, which is in the low area of the historical average.
Fourth, summary
Since the beginning of this year, the mainstream refrigerants have appeared in 20% to 40%, and the rapid and substantial growth of products in the short term is the main driving force for the fluorine chemical sector. In the long run, after the quota is landed, the industry pattern continues to be optimized, and the refrigerant industry is at an important time node in the new cycle, and it may maintain a high degree of prosperity in the next few years. In terms of valuation, the industry has completed the repair process of low valuation, and it will need to improve performance to pull **.
In terms of industry structure, Juhua Co., Ltd. is the leading refrigerant in the industry and has the strongest comprehensive competitiveness; Haohua Technology has advantages in high-end products, and the proposed acquisition of Sinochem Blue Sky refrigerant production capacity is large; Polyfluoride is the leader of lithium hexafluorophosphate; Sanmei's refrigerant business accounts for a high proportion, with high performance flexibility and high valuation; Goldstone resources are scarce in fluorite resources, and the supply of the industry is tight.
So far, the fluorine chemical industry has been simply sorted out, I hope it will help your investment, I don't know if you have found the target in your mind, welcome to leave a message.