1 SAP end products expected to put into operation this month
Superabsorbent (SuperAbsorbentPolymer, referred SAP) by the polymerization of low molecular weight substances by synthesis or by a chemical reaction of polymers made from a moderately crosslinked by a three-dimensional network structure of the new functional polymer materials, molecular chain the strongly hydrophilic group contains a lot, can absorb several times its own weight equal or even thousands of times of water. SAP not only absorbent capacity, water retention capacity is very strong, with a lot of water, have a considerable gel strength, and in a dry environment moisture will slowly release, so called high water retentivity material.
Although many varieties of SAP, but the product is mainly used as a crosslinked polyacrylic acid (salt), acrylic acid ester copolymer and starch – acrylic acid graft polymer, wherein the crosslinked polyacrylic acid (salt) because of its excellent comprehensive class SAP performance, production accounts for more than 80% of world production. SAP is the main application areas of acrylic acid, while the main raw material is acrylic SAP.
Acrylic acid impurities on the quality and stability of SAP has a great influence. Usually esterification stage acrylic compounds containing aldehyde dimer and polymerization inhibitor. Over the production process in the SAP product impurities be color, appearance, have a serious adverse effect on water absorption, while high levels of impurities can lead to skin irritation, not suitable for personal hygiene products. So for the ordinary esterification stage acrylic need to go through further purification to give pure acrylic acid, can be used for the production of SAP. SAP is the acrylic acid and esters industrial chain of high-end products.
SAP because with superior moisture absorption and retention capabilities in industry, agriculture, health care, aspects of daily necessities are widely used, but the most important application is for diapers and hygiene products, which accounted for SAP application of demand 80%. With an aging population while gradually coming era, SAP opened up a broader market.
According to industry data for 2009, SAP’s worldwide production mainly concentrated in Europe and other developed countries and regions, accounting for 77.0% of the global total capacity. By the construction of an SAP enterprise independent production capacity is only 83,000 tons, accounting for Asia (excluding Japan) region capacity ratio was 21.2%, accounting for 4.9 percent global share, but this part of the production capacity is produced by a number of companies, our independently owned SAP capacity of small and scattered, poor international competitiveness. Manufacturer of high-end health supplies are mainly imported using SAP.
Independent research and development satellite petrochemical SAP production process to achieve a product from a small scale, pilot to the development of industrial production, the company became the sole owner of the patent SAP continuous production enterprises. The company will be taken based on the high-end SAP products, in order to point strategy, in 2012 the company’s SAP docking pilot products have stable market.
According to satellite Petrochemical 2013 work plan, the company should ensure that homegrown produce 30,000 tons of SAP project went into operation in mid-2013. We expect that the project will be put into operation this month. At the same time as the company has stabilized docking pilot product market, we believe that the company product technology and quality are at a high level, the company is expected to SAP project put into operation quickly open the market, and gradually complete the import substitution process.
SAP project into production is expected to drive the company’s profit improvement. According to foreign products profitability, SAP product gross margin is expected to reach 40 to 50%. Company 30,000 tons SAP project is finished, we expect net profit of its products t 4,000 yuan in 3000, the company’s contribution to the EPS of 0.25 yuan.
2 projects under construction steadily
Rest of the company’s major projects under construction include acrylic acid and esters projects and propane dehydrogenation project.
Company 320,000 tons of acrylic acid, 300,000 tons acrylate orderly implementation of the project is, we expect that the project will be completed before the end of 2013, thus further enhance the company’s acrylic acid and esters production capacity and performance flexibility.
450,000 tons of propane dehydrogenation (PDH) project is progressing as follows: (1) tank construction. Currently, the tank has been assembled, three 60,000 m3 double refrigerated tanks are speeding assembly; (2) public works. Construction basically completed, will enter the pipeline; (3) production plant is being civil construction; (4) long-cycle all equipment purchases done other procurement matters according to the project schedule requirements orderly; (5) the staff. Technicians and operators basically in place, the operator entered the training phase. We expect that the project will be completed before the end of 2013, Sinopec is expected to become the first satellite built PDH projects listed companies.
The company has 160,000 tons of acrylic acid, 150,000 tons of production capacity acrylate; With the construction projects coming on stream, we expect to end 2013, the company will have 450,000 tons of propylene, 480,000 tons of acrylic acid, 450,000 tons acrylic ester production capacity, the company’s results for the acrylic acid and esters flexibility will be significantly enhanced. Acrylic acid and esters when the company’s annual sales will reach 60 million tons, while the price of acrylic acid and esters rose 1,000 yuan each, the static case, the company will thicken EPS 1.04 yuan. Meanwhile PDH completion of the project will allow the company to form a “propane – propylene – Acrylic – acrylate” the whole industry chain, reduce the company’s production costs, enhance the company’s resistance to price fluctuation risks, while significantly improving the company’s profitability.
3. Earnings forecasts and investment ratings
The company has more projects under construction will be completed and put into operation during the year. SAP will shortly become an important profit growth in the long term performance of the company resilient acrylic acid and esters will further increase, while the company will form a “propane – propylene – Acrylic – acrylate” a complete industrial chain, thereby reducing the procurement of raw materials costs. In addition the company through its own funds and bank loans can solve the investment funds needed, does not require equity financing, equity in the company under the same multi-project production company’s revenue is expected to make profits grow exponentially. We expect the company from 2013 to 2014 EPS were 1.05,1.73 yuan, according to 2014 EPS and 15 times PE, we give the company a target price of 25.95 yuan, maintaining a “buy” rating.