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Jiutian Chemical - UOB Kay Hian 2022-05-11: 1Q22 Achieved High ASPs On Limited Industry Supply

JIUTIAN CHEMICAL GROUP LIMITED (SGX:C8R) | SGinvestors.io JIUTIAN CHEMICAL GROUP LIMITED (SGX:C8R)

Jiutian Chemical - 1Q22 Achieved High ASPs On Limited Industry Supply

  • Jiutian Chemical’s 1Q22 strong net profit of RMB201.1m (+122.7% y-o-y) came from higher revenue of RMB772.3m (+75.8% y-o-y), as ASPs for DMF and MA remained elevated.
  • The industry supply shortage is expected to keep feedstock ASPs high for 2022 and 2023, which would lead to positive operating leverage and solid free cashflow generation for Jiutian Chemical.
  • Maintain BUY with a higher target price after raising our forward assumptions for product ASPs.



Stark improvement in Jiutian Chemical's 1Q22 financials.

  • Jiutian Chemical (SGX:C8R)’s 2021 net profit of RMB201.1m (+122.7% y-o-y) was attributable to higher revenue of RMB772.3m (+75.8% y-o-y), which came mainly from elevated product ASPs. Operating cash flow in 1Q22 reversed into positive territory at RMB29.4m (1Q21: negative RMB73.2m), despite a build-up of inventories arising from movement restrictions for delivery of finished goods.
  • The strong set of results came amid the seasonally slow quarter, as well as lower production volume in Jan 22 due to COVID-19 related restrictions affecting logistics. An interim dividend of 0.75 cents was declared, 114% higher than 0.35 cents in 1Q21.


Product ASPs remained elevated.

  • Prices of dimethylformamide (DMF) and methylamine (MA) spiked to RMB16,166/tonne (+73% y-o-y) and RMB20,055/tonne (+116% y-o-y) respectively. DMF and MA prices have Jiutian Chemical, and we expect 2022 financials to reflect a significant scale-up in gross margin and operating leverage.


Jiutian Chemical - Earnings forecast revision & recommendation






Clement Ho UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-05-11
SGX Stock Analyst Report BUY MAINTAIN BUY 0.180 UP 0.168



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