Event: the company's performance grew strongly in the first three quarters of 2022: from January to September, the net profit of returning home was 250 million yuan, an increase of 1482%; the deduction of non-net profit was 243 million yuan, an increase of 2160%, falling within the range of previous performance forecasts. Q3's net profit of returning to its mother in a single quarter was 58 million yuan, an increase of 944%, while deducting non-net profit was 54 million yuan, an increase of 73%.
The seasonal characteristics of chemicals disturb the Q3 performance, and the Q4 peak season delivery and settlement performance is released. The medium-and long-term positive trend remains due to the elimination of the impact of the Jiangsu Xiangshui incident to achieve normal supply, and the stable and diversified application scenarios of downstream agricultural production continue to extend to provide a new growth curve, resulting in a high increase in cyanuric chloride emissions, leading to a substantial increase in profits in the first three quarters. The quarter-on-quarter decline in performance in the third quarter is mainly affected by the seasonal fluctuations of chemicals and the external environment:
1) cyanuric chloride: the seasonal characteristic is obvious, Q3 is the off-season of sales, and the market price is basically flat than the previous month, which proves that the downstream demand is strong and the unit profit level is still considerable. Q4 peak season settlement is expected to support strong business growth.
2) Color masterbatch: the global macroeconomic downturn superimposed the impact of the epidemic situation to reduce the consumer demand for plastic products, making it difficult to raise the price of color masterbatch. The company relies on fund-raising projects to increase product transformation, product profitability is expected to gradually pick up.
The accelerated release of diaphragm production capacity is expected to gradually contribute to the performance. At present, three diaphragm production lines have been completed and put into production, and another production line has entered the stage of trial production. Or it will be fully put into production this month to build a total capacity of 300 million square meters. The company firmly promotes production capacity construction and has signed an equipment procurement contract with Zipu Machinery. 600 million square meters of production capacity may be added in 2023, and the long-term plan may exceed 1.5 billion square meters. Customers have passed Anchi technology product certification and completed the delivery of pilot orders, while Ganfeng Lithium, Zhuogao and other customers' sample certification work is in progress smoothly. Accelerate the landing of production capacity and downstream strong demand to form a resonance, the performance is expected to be gradually realized. At the same time, the company set up a joint venture to speed up the research and development of new products, and is determined to become an excellent wet diaphragm supplier in lithium battery, sodium battery, semi-solid battery and other industries. On the other hand, the company strengthens the coordination of the industrial chain, relies on the scarce cyanide license and sufficient sodium cyanide production capacity to distribute sodium ion battery materials, increases the investment of Shenzhen Huasai New Materials to hold 7%, and sets up a joint venture with colorful Chemical to build battery-grade Prussian Blue (White) projects. Prussian materials are promising sodium electric materials because of their high energy density, low cost and good structural stability.
The company will speed up the research and development of sodium battery materials by virtue of advanced technology and cyanide resources to create platform competitiveness.
Investment suggestion
The company is expected to return to its parent net profit of 372 million yuan in 22-23-24, corresponding to 31x/22x/17x E, maintaining a "buy" rating.
Risk hint
The development of new energy vehicles is not as expected; the development of capacity expansion products is not as expected; the fluctuation of material prices, etc.