Summary: In the first half of 2024, with the implementation of refrigerant quota management, the profitability of fluorochemical enterprises improved significantly. The rebound of refrigerant demand and the implementation of quota management effectively improved the market supply and demand relationship, which promoted the recovery of the industry. Brokers are generally optimistic about the medium- to long-term development of the refrigerant industry, and expect the industry to benefit from supply-side constraints and stable growth in downstream demand.
On the evening of July 9, Juhua shares (600160) performance forecast shows that the company expects the net profit attributable to shareholders of listed companies in the first half of 2024 to be 740 million yuan to 880 million yuan, an increase of 250 million yuan to 390 million yuan compared with the same period of the previous year, a year-on-year increase of 51% to 80%. Net profit after deduction will be 700 million yuan to 840 million yuan, an increase of 53% to 84% year-on-year.
Sanmei (603379) is expected to achieve net profit attributable to shareholders of listed companies in the half-year of 2024 of 334 million yuan to 434 million yuan, an increase of 157.19% to 234.35% year-on-year, while net profit after deduction of non-compliance is expected to be 325 million yuan to 423 million yuan, an increase of 158.93% to 236.61% year-on-year.
Table 1: Net Profit Increase of Major Fluorochemical Companies in H1 2024
Behind the big increase in the performance of the above two fluorine chemical enterprises is the sharp increase in the price of refrigerants. According to Baichuan Yingfu, on July 3, the prices of the third-generation refrigerants R22, R32, R134a and R125 were 30,000 yuan, 36,000 yuan, 30,000 yuan and 34,500 yuan per ton, which were 54%, 112%, 9% and 25% higher than those at the beginning of the year.
And during the period of the third generation refrigerant quota competition, i.e. from 2020 to 2022, the main domestic refrigerants are almost regardless of cost to fight for sales. For example, the main product of third-generation refrigerants, R32, each enterprise, depending on their own products, offer prices focused on 12,000 yuan - 14,000 yuan / ton, while the cost price is generally 18,000 yuan / ton. That is to say, for every ton sold, a loss of about 4,000 yuan - 6,000 yuan.
The price war of third-generation refrigerants directly affects the overall performance of related listed companies. For example, the net profit of Juhua shares in 2019 is 899 million yuan, and the net profit in 2020 drops to 95 million yuan; the net profit of Sanmei shares in 2019 is 646 million yuan, and the net profit in 2020 drops to 222 million yuan; the net profit of Yonghe shares in 2019 is 139 million yuan, and the net profit in 2020 drops to 102 million yuan.
Table 2: Historic Net Income for Key Refrigerant Companies (2019 - 2020)
For this year's half-yearly earnings forecast reasons, Juhua shares and Sanmei shares also mentioned the quota system management under the refrigerant prices rose sharply.
Juhua shares said that during the reporting period, the company's main product market structural contradictions are prominent. China's third-generation fluorine refrigerants (HFCs) January 1, 2024 began to implement the production quota system, the original serious overcapacity caused by the contradiction of low product prices have been effectively resolved, superimposed on the improvement of demand for some varieties of HFCs product price recovery upward trend; at the same time, the second-generation fluorine refrigerants (HCFCs) production quota will be further cut in 2025, the supply reduction and demand is relatively rigid, the price of HCFCs products upward; In addition, by the abundant supply and weak demand, the company's fluoropolymers market structural contradictions are prominent. At the same time, the production quota of second-generation fluorine refrigerants (HCFCs) will be further reduced in 2025, and under the expectation of supply reduction and relative rigidity of demand, the price of HCFCs products will go up; in addition, affected by the abundant supply and weak demand, the prices of the company's fluoropolymer materials, food packaging materials, and basic chemical products have dropped considerably.
Sanmei said that quota management for hydrofluorocarbons (HFCs) starts in 2024. During the reporting period, the price of the company's HFCs refrigerant products increased year-on-year, sales volume increased year-on-year, while the prices of some major raw materials decreased year-on-year, and the profitability of the products improved.
In terms of production and sales, in the first half of 2024, Juhua's refrigerant production reached 300,400 tons, an increase of 21.87% year-on-year, while external sales reached 161,400 tons, an increase of 11.9% year-on-year, and operating income reached 3.925 billion yuan, an increase of 36.5% year-on-year.
In addition, Juhua's revenue from fluorine-containing fine chemicals also grew significantly.2024 In the first half of the year, Juhua's production of fluorine-containing fine chemicals reached 2,874.44 tons, an increase of 164.82% year-on-year, while its sales volume reached 2,820.22 tons, an increase of 302.59% year-on-year, and its operating income reached RMB147,147,900,000, an increase of 107.91% year-on-year.
Table 3: Juhua's Production, Sales and Revenue in H1 2024
Around the refrigerant industry's next step, a number of brokerage firms recently released a research report, and coincidentally optimistic about the next stage of the industry's earnings prospects.
Huatai Securities research report pointed out that, considering the third quarter maintenance demand season and the traditional maintenance season, short-term refrigerant prices also have upward momentum. In the medium and long term, considering the refrigerant ushered in the supply of strong constraints cycle, superimposed on the air conditioning / automotive demand support, two / three generations of refrigerants are expected to be high boom.
Guosen Securities research report pointed out that with the quota management landing, supply-side structural reform is deepening, the industry competition pattern tends to concentrate, while the downstream demand continues to grow steadily, new areas, emerging market demand for high-speed development, optimistic about the three generations of refrigerants will continue to boom recovery, supply and demand pattern of the development trend of the development trend of the certainty of a strong.
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