Satellite Petrochemical released its 2017 annual report on March 13, with revenue of RMB 8.18 billion, a year-on-year increase of 52.9%, and a net profit of RMB 942 million, a year-on-year increase of 202.5%. The results are in line with expectations. Calculated in accordance with the total share capital of 1.064 billion shares, corresponding to EPS. It was RMB 0.89. Of which, 2017Q4 net profit was RMB 247 million, a year-on-year increase of 16.4%. The company plans to send RMB 0.88 (taxes included) for every 10 shares.
Acrylic and ester boom boosted performance growth, post-holidays product boom further
During the reporting period, the company’s main product, acrylic acid and esters, was stable in production and sales, and the business climate improved. According to Baichuan Information, taking the East China market as an example, the average acrylic acid/butyl acrylate price in 2017 was 8410/9890 yuan/ton, which was a year-on-year increase of 30.8%/30.9. %, The business realized revenue of 5.28 billion yuan, an increase of 32.1% over the same period of last year, and gross profit margin increased by 2.4pct to 24.4%. According to Jinlianchuang information, since March, multiple sets of overseas plants have been shut down or encountered no resistance, and export orders have grown significantly. At present, the acrylic acid/acrylic East China market price is 8400/10200 yuan/ton, and the post-holiday gains are 12%/13%, respectively, and the product profitability has improved significantly.
PDH profit improvement and PP production benefited performance, heating end price difference rose significantly
We estimate that the price difference between propylene and propane in 2017 was basically the same as the year-earlier period, the operating rate of the company's PDH plant was increased (annual report), and the polypropylene plant contributed full-year production capacity (put into operation in October 2016), driving the company's sales volume to increase by 20.1% to 1,088,000 tons. ) Propylene business achieved revenue of 1.842 billion yuan, up 200.6% year-on-year, and gross profit margin increased by 5.3pct to 22.7%. The subsidiary's satellite energy net profit was 289 million yuan, up 78.4% year-on-year. Recently, heating demand gradually decreased, according to Treasure Island. According to the data, the current price of CFR for propane refrigeration in East China is 463 USdollars/ton, which is 23.7% lower than the peak value at the end of 2017. The profitability of PDH installations is expected to improve significantly.
Improvement in SAP business, increased latex revenues, and stable pigment intermediates
During the reporting period, the company's customer growth in SAP drives sales volume growth, achieved revenue of RMB 63 million, an increase of 19.2% year-on-year, gross profit margin increased by 15.5 pct to 0.8%, and polymer emulsion/pigment intermediate achieved revenue of RMB 52.11 billion, respectively. The year-on-year change of 55%/-8%, gross margin changes -4.1/0.3pct to 32.6%/44.4%.
To establish a joint venture company in the United States to lock down ethane resources
The company announced on March 13 that SATELLITE PETROCHEMICAL USA CORP. (Satellite Petrochemical (USA) Company, referred to as 'USA Satellite'), a wholly-owned subsidiary of Zhejiang Satellite Petrochemical Co., Ltd., was established in the United States. PARTNERS MARKETING & TERMINALS LP ("SPMT" for short) jointly funded the establishment of a new company in the United States, namely ORBIT GULF COAST NGL EXPORTS, LLC. (names registered with the relevant US company's registration department, referred to as 'joint ventures'), Registered addresses are planned for construction sites in the Texas joint venture.
The total investment of the joint venture company is 630 million U.S. dollars, of which, SPMT invested 334 million U.S. dollars, holding 53% of the shares; U.S. satellites invested 296 million U.S. dollars, holding 47% of the shares. Both parties invested cash based on their respective shareholdings, specifically according to project construction. Progress is funded. The company is mainly engaged in the operation and management of ethane export facilities.
Since the U.S. shale gas revolution, NGL has had a sufficient supply of gas. It has produced methane, ethane, propane and butane, and among them, methane, propane and butane have matured global markets. The downstream demand is relatively large and relatively stable. Ethylene cracking to make ethylene is a rising industry in recent years. In addition to the cracking device for ethane in the United States, producers are considering the risk of investment in export facilities, and the ethylene cracking and demolition equipment has just received attention outside the United States. In the late evening, the investment in facilities was slow, so fewer companies built ethane export facilities.
U.S. satellite investment establishes a joint venture company to exploit the U.S. market; on the other hand, it can seize the opportunity to obtain ready-made U.S. resources, seek the rapid export of ethane to occupy the ethane supply market, and thirdly, satellite petrochemical construction in Lianyungang. The 10,000-ton light hydrocarbon comprehensive utilization project can provide the raw material export stability guarantee for the project.
The risk of the project
1 Capital risk: As this project is the first time for the company to invest in a foreign project since its establishment, the required time for funds is high. And the current project investment and foreign exchange management requirements are relatively high. If the funds are not approved in time, the progress of the project will be affected. Therefore, The funding issue is also one of the factors that affect the smooth progress of the project;
2Cultural and Talent Risks: The company invests in joint venture companies in the United States for the first time. There is a process of adaptation and adaptation to the exchange of personnel with American counterparts and cultural recognition. In production practice, it is necessary to accelerate integration;
3 Market risk: The good market prospects and considerable economic benefits of the olefin industry will either attract a large amount of capital and continue to influx, which may intensify competition in the industry and lead to price decline, which will adversely affect the company's future profitability.
4 Approval and Uncertainty Risks: This project needs to apply for filing with the Zhejiang Provincial Development and Reform Commission and Zhejiang Provincial Department of Commerce, and may need to file a review with the Committee on Foreign Investment in the United States. The risk of inconsistency between the filing application or approval content and the schedule agreed in this agreement.