Jiutian is the second largest Dimethylformamide (DMF) producer in China, with a total annual capacity of 150,000 tons of DMF and methylamine (MA). Both these chemicals are important ingredients in industries as diverse as consumer goods, petrochemicals, electronics, pharmaceuticals and fertilisers. In addition, it now produces chemicals for fast growing sectors such as batteries that are used in electric vehicles.
China’s economy has benefited from supply disruptions in the rest of the world. We see this trend continuing this year and may surprise on the upside given the unprecedented amount of fiscal and monetary stimulus around the world.
Robust prices. Prices of DMF, its main product, remain resilient. DMF prices rose above RMB 12,000 per tonne last week, 22% higher than our RMB 9,800 forecast for 2021.
Outperform with fundamental TP of S$0.145. Given the buoyant DMF prices, we maintain our Outperform recommendation and TP of S$0.145 which we published in our initiation report on 17 May 2021.
Earnings watch and catalyst. The company is likely to report its first half earnings in the second week of August.