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Wanhua Chemical (600309): September’s MDI listing price rises 51% stake in Fujian Cornell to orderly advance and help Wanhua develop steadily

Wanhua Chemical (600309): September’s MDI listing price rises 51% stake in Fujian Cornell to orderly advance and help Wanhua develop steadily

Event 1: September MDI listing price announcement.

On the evening of August 28, Wanhua Chemical announced the September MDI listing price. Its aggregated MDI distribution and direct sales market in China was 15,500 yuan / ton (+500 yuan / ton), and the pure MDI listing price was 21,700 yuan / ton (moon).) +1000 yuan / ton).

Event 2: Announcement of the acquisition of 51% equity in Fujian Cornell.

After the acquisition of Chematur on July 30 and August 1, Wanhua and Cornell Chemical made the latest progress in the transaction. On the evening of August 28, Wanhua Chemical announced the acquisition of 51% equity in Fujian Cornell. Important matters include: Acquired 51% equity of Fujian Cornell held by Cornell Chemical at zero yuan (the company’s existing shareholders paid zero yuan; Cornell Chemical currently holds 55% of the shares), the two parties signed an agreement on August 25It is agreed to complete the equity settlement within 30 working days from the date of signing; after the transfer of 51% of the equity registration is completed, Wanhua agrees that Wanhua Tax will pay the remaining 40% of the outstanding shares of Chematur’s equity acquisition in proportion to Cornell Investment(Total amount 9.

2.5 billion); Within two months after the completion of the registration of the transfer of the 51% equity transfer, Cornell Chemical and Wanhua completed a 400 million RMB investment in Fujian Cornell; Wanhua and a third party designated by Wanhua held Fujian Cornell 80%, Cornell Chemical and Cornell Chemical designated third-party shares in Fujian Cornell 20% (this matter is still uncertain); Wanhua and Cornell Chemical completed at zero price, 20% equity in Cornell ChemicalFive years from the next day after all the paid-in registered capital is in place and before December 31, 2025 (Fujian Cornell’s registered capital is US $ 2.8 billion, Cornell Chemical has the right to request Wanhua or a third party designated by WanhuaPurchasing the remaining 20% of the target company’s equity held by Cornell Chemical’s paid-in registered capital + 900 million US dollars-dividends during the joint venture; Cornell Chemical promises to know its MDI technology informationIt has the obligation of confidentiality, the confidentiality period is permanent, and it can engage in any competitive activities directly or indirectly (prohibition of competition).

Comment 1: The slight increase in aggregated MDI in Wanhua’s listed price in September was in line with expectations, and pure MDI increased slightly higher than expected; pay attention to the trend of MDI prices in the traditional traditional peak season.

We pointed out in the Chemical Weekly Report on August 25 that the traditional peak season of MDI “Golden Nine Silver and Ten Years” this year after the tariff was levied again is uncertain. In this context, minor problems on the supply side may be secondary logic, and thereforeWe expect the MDI listing price to be basically flat or slightly up in September.

Last Friday, the aggregate MDI dealer price ended three weeks of decline and the inflection point increased (the latest price is 13,100 yuan / ton). This week, the weathervane of Covestro also increased by 200 yuan / ton. Looking at the trend from 10,000 yuanThe price 杭州桑拿 of China Polymer MDI increased slightly by 500 yuan / ton in line with expectations.

Looking at the difference, in September, Wanhua Polymer’s MDI listing price was higher than the current dealer price of 2,400 yuan / ton (the difference was 1800 yuan / ton at last month’s announced price), while pure MDI was 3700 yuan / ton (topThe monthly price was announced at 1,200 yuan / ton.) This shows that pure MDI has risen, split, or converted into words. We analyze that the short shelf life of pure MDI has caused the stock buffer pool to gradually trade under the impact of emergencies (including demand).Problems, including recent supply-side device problems) The main reason for steeper price changes.

Subsequently, MDI demand entered a traditional off-season after October. The MDI price trend in September and October was an 深圳桑拿网 important causal link between market supply and demand and the operating performance of manufacturers. Subsequent price changes still require attention.

Opinion 2: The transfer of equity in Fujian Cornell has progressed in an orderly manner, the MDI industry structure has been further consolidated, and the acquisition of Fujian production bases will further contribute to Wanhua’s stable development.

In our comment on July 31, we have analyzed the significance of the Chematur acquisition to Wanhua’s consolidation of the leading position in the MDI industry, and the signing of the equity transfer of Fujian Cornell is a follow-up to this event.

The new acquisition announcement supplements Cornell Chemical’s right to declare an additional 90% 20% premium allocation to Wanhua within a certain period of time after completing its 20% capital injection into Fujian Cornell. The announcement states that the transaction price is Wanhua”On the basis of full due diligence on Cornell Fujian, according to the signed land investment contract for the project and obtaining the construction permit, the MDI project has been approved, and the full consideration of the MDI market competition pattern and future supply and demand changes” was determined through negotiations between the two parties.
In the final announcement, Fujian Cornell’s preliminary project expenditure was about 300 million US dollars, and the actual funds were paid1.

800 million; until 19H1, Fujian Cornell’s construction in progress surplus1.

2.6 billion, the original value of fixed assets balance 36.

330,000 yuan, the balance of the original value of intangible assets1.

750,000 yuan (According to accounting standards, land use rights are generally attributed to it), the net asset balance is 0 yuan.

Another point is that the announcement made clear the requirement that Cornell Chemical and its affiliates should “permanently keep confidential MDI technical information” and “prohibit competition”.

The acquisition announcement stated that Wanhua’s acquisition of Fujian Cornell will have a manufacturing base in Fujian. It plans to invest in the construction of MDI built-in supporting devices to increase the company’s production capacity, optimize the MDI industry layout, and enhance industry competitiveness.

We analyze that “with full consideration of the MDI market competition pattern and future changes in supply and demand”, it is of great market strategic significance to have assets that are suitable for investment in MDI projects at any time; at the same time, from a broader scale, FujianThe acquisition of the production base will further help Wanhua’s stable development.

Core view: Wanhua Chemical is a scarce core asset of the Chinese chemical industry. At the same time, it has the largest single-product MDI business in the world. It is developing three major industries with huge expenditures. It has a rich R & D pipeline from the original to the terminal.Cash cow business has both short-term growth momentum and long-term growth potential.

In terms of industry β, the history of the mdi industry with extremely high barriers is 25-40%. Benefiting from the change in the oligopoly layout from competition to cooperation, the price of mdi is expected to recover in 19-21, and profitability has long-term security. In terms of company α,The net assets are 39.7 billion, and the total investment of projects that have been planned for construction investment in 3-5 years is more than 31.3 billion.3 billion Euro base expansion and expansion project, etc.), strong strategic planning capabilities, original research and development capabilities, and engineering control are the basis for the project to be implemented, and will also promote Wanhua as a global comprehensive chemical leader.

Investment suggestion: We expect the company’s EPS to be 3 in 19-21.

53/3.

86/4.

49 yuan; maintain Buy-A investment rating, 6-month target price is 50 yuan / share, equivalent to 19-21 year P / E ratio of 14.
.

2/13.

0/11.

1 times.

Risk reminder: the risk of technology diffusion in the MDI industry, the risks arising from the commissioning of petrochemical and new materials projects, the downstream demand continues to be less than expected, and the subsequent events of the acquisition of chemical and Fujian Cornell are less than expected.