Introduction to this report:
The company received a new sales contract of 143 million yuan for laser gas and high-purity rare gas products, which were recognized by semiconductor customers one after another, and special gas emissions accelerated in 2022.
Key points of investment:
The growth in specialty exceeded expectations, maintaining the “increase in holdings” rating. Considering the rapid release of the company's specialty sales orders and the acceleration of the introduction of downstream customers, the high growth of electronic specialty products is expected to continue. The increase in the share of specialty revenue elevates the company's valuation, maintaining the company's EPS of 2022-2024 at 0.38/0.59/0.81 yuan. Referring to the industry average valuation, the company was given 42 times PE in 2023, raising the target price to 24.78 yuan to maintain the increase in holdings.
After receiving another 143 million yuan of electronic specialty gas orders, laser gas is expected to continue to break through after passing ASML certification. On September 22, the company announced the signing of an electronic specialty gas sales contract to sell laser gas and high-purity rare gas products worth 143 million yuan. Since 2022, the company has announced 5 special gas sales orders, with a total amount of 258 million yuan, proving that specialty gas products have been gradually recognized by downstream semiconductor customers. It is expected that the total revenue of the electronic specialty gas business in 2022 will exceed 300 million yuan.
The company's specialty gas products are actively promoting ASML certification, and the release of laser gas is expected to accelerate at that time.
The price of rare gases rose and fell, and the company's specialty gas products achieved “volume for price”. In the first half of 2022, the Russian-Ukrainian conflict caused a shortage of supply of rare gases and a sharp rise in prices. According to Baichuan Yingfu data, the prices of neon and krypton gas once rose to a high of 1.58,000 yuan/cubic meter during the year. With the release of domestic rare gas production capacity, the prices of neon and krypton gas dropped to 0.48, 23,000 yuan/cubic meter on September 16, 2022. The company's gross margin for specialty gases reached 84.67% in 2022/H1, and the company is expected to buffer the gross margin of rare gases such as neon and krypton gas through special gas emissions in the second half of the year.
The Baling petrochemical project achieved self-sufficiency of raw materials to maintain high gross profit, and the expansion of production in other businesses brought about increases. The company's Baling Sinopec 90,000 air separation project is expected to be put into operation in the first half of 2023, and rare gases such as neon, krypton, and xenon will be self-sufficient as raw materials. The company plans to expand carbon dioxide production by 700,000 tons and hydrogen peroxide production by 600,000 tons. The release of production capacity will lead to an increase in performance.
Risk warning: 1) The special gas certification process fell short of expectations; 2) downstream demand for special gases fell short of expectations.