Financial analysis of leading chemical enterprises

I. Profit analysis of chemical related listed companies

From the top ten stocks of stock price and net profit increase in 2021 and 2022Q1, it can be seen that enterprises in sub-industries such as fertilizer, chlorine alkali, soda ash and pesticides have strong profitability and high market attention. The main reason is that the profit margin continues to rise due to the sharp rise in product prices under the background of good supply and demand. The demand side of the fertilizer sector is rigid, and the supply side in the context of the Russia-Ukraine war, Russia, as an important fertilizer producer in the world, decided to stop fertilizer exports. Its nitrogen fertilizer, potassium fertilizer, phosphate fertilizer, urea production accounted for 23%, 18%, 15%, 14%, is the world's largest exporter of nitrogen fertilizer, the second largest exporter of potash fertilizer, the fourth largest phosphate fertilizer exporter, in the policy implementation is expected in the future global fertilizer supply or will tighten; Considering the need for the achievement of the annual economic growth target and stable growth, the real estate support policy is frequent, and the support of the demand side is relatively strong. On the whole, in the context of increased macro environmental uncertainty, the market pays more attention to the certainty of the demand side. (Report source: Future Think Tank)

Ii. Financial analysis of leading chemical enterprises

1.1 Wanhua Chemical: polyurethane short-term pressure, new material plate accelerated growth

The annual results were in line with expectations, and the advantages were further prominent after the expansion of production. In 2021, the company achieved operating income of 145.538 billion yuan, an increase of 98.19%; Net profit returned to the mother was 24.649 billion yuan, an increase of 145.47%, and the performance was in line with expectations. Polyurethane profit is basically stable, the annual polymerization MDI price increased by 37.45%, thermal coal price increased by 77.9%, the overall gross margin of 26.3%, the same as the same basis. In 2021, the company's polyurethane sales increased by 33% year-on-year, and the sales of petrochemical series increased by 75% year-on-year, and the advantages of expanded production were further prominent.

In the first quarter, the polyurethane price spread narrowed year-on-year, driving the overall gross margin down. In the first quarter of 2022, the company achieved operating income of 41.784 billion yuan, an increase of 33.44%, and net profit attributable to the mother of 5.374 billion yuan, a decrease of 18.84%. In the first quarter, the company's core product polyurethane boom has declined, polymerized MDI prices fell 4.9%, raw material thermal coal and pure benzene prices increased 41% and 43%, respectively, the company's overall gross margin fell 11.6% in the first quarter. From the sequential point of view, the MDI spread in the first quarter was slightly enlarged compared with the fourth quarter, and the gross margin increased by 3.5%.

Forward-looking layout of emerging materials, research and development costs increased significantly. In 2021, the company's R&D expenditure was 3.168 billion yuan, +55.07% year-on-year, and R&D investment continued to increase, and the company increased technology incubation investment around high-end chemical new materials and solutions, emerging materials and other new business segments. In 2021, the company's engineering construction is under construction 53 projects, of which 23 projects are being delivered. Construction in progress rose 26 per cent year on year. In 2021, the company's R&D expenditure was 3.168 billion yuan, an increase of 55.07%, and R&D investment continued to increase.

1.2 Hualu Hengsheng: The performance has steadily improved, and the multi-project layout construction has driven the development

The first quarter compared with the fourth quarter earnings improved, and the performance was steadily released. In 2021, the company achieved operating income of 26.636 billion yuan, an increase of 103%, and net profit attributable to the mother of 7.254 billion yuan, an increase of 303%. In the first quarter of 2022, the company achieved operating income of 8.115 billion yuan, an increase of 62.2%, and net profit to the mother of 2.429 billion yuan, an increase of 54.13%. In the fourth quarter of last year, the company experienced a sharp rise in coal prices after the process of falling back, the rising cost made the overall profit space slightly compressed, the whole body gross profit rate in the fourth quarter of about 26.54%, the quarter has declined. Entering the first quarter, the company's coal prices fell quarter on quarter, DMC projects, caprolactam projects to achieve full quarter operation, the company's single quarter profit hit a record high, an increase of about 48%, gross margin of 39.0%, an increase of 12.5%. At this stage, the company's product operation still maintains high load operation, and it is expected that product sales will increase from the first quarter.