wanhua(SH:600309) Guoxin Securities·2024-07-26 03:02Investment Rating - The investment rating for Wanhua Chemical is "Outperform the Market" (maintained) [1][19] Core Views - The joint venture project for specialty polyolefins aims to enhance domestic production capabilities, reducing reliance on imports and leveraging advanced technology [2][3] - The project is expected to have a strong economic foundation based on ethane as a raw material, supported by the expertise of the involved parties [2][3] - Wanhua Chemical's projected net profit for 2024-2026 is estimated at 19.384 billion, 22.473 billion, and 23.337 billion yuan, with year-on-year growth rates of +15.3%, +15.9%, and +3.8% respectively [2][19] Summary by Sections Project Overview - On July 23, 2024, Wanhua Chemical and its partners signed a cooperation agreement to establish a joint venture for a 1.6 million tons/year specialty polyolefins facility in Fuzhou, China [2][3] - The project will utilize Borealis' proprietary Borstar® technology and aims to address the high technical barriers and import dependency in China's specialty polyolefins market [3] Market Context - The specialty polyolefins market in China reached a scale of 74.4 billion yuan in 2023, with a year-on-year growth of 17% [3] - The domestic production capacity is gradually increasing as companies enhance their technological capabilities [3] Financial Projections - The projected earnings per share (EPS) for 2024, 2025, and 2026 are 6.17, 7.16, and 7.43 yuan respectively, with current price-to-earnings (PE) ratios of 12.7, 11.0, and 10.6 [2][19] - The company is expected to maintain stable profit margins while advancing new projects [19]