Description of the event
Yueyang Xingchang announced its report for the third quarter of 2022: during the reporting period, the company achieved operating income of 2,364 million yuan, +84.14% year on year; net profit of the mother was 502.0398 million yuan, +63.41% year on year.
Incident reviews
Q3 performance was the same, with a slight increase from month to month, and new projects will contribute new growth points in the future. In Q3 2022, the company achieved revenue of 803 million yuan, +31.85% year on year and +3.30% month on month. Guimu achieved net profit of 19.8614 million yuan, +6.01% year on year and +6.89% month on month. Q3 gross profit margin was 3.02%, -0.41pct month-on-month, Q3 net profit margin 2.47%, -0.08pct month-on-month. The company's third quarter performance increased year-on-year and month-on-month. Entering the second half of 2022, product prices in the energy chemical sector fell into a downward range as crude oil prices fell; the cost of the polyolefin industry in the new materials sector fell slightly, and the prosperity of phenolic products maintained. At present, the construction of the inter-company paracresol project was completed in September, and one-year trial production has begun. Huizhou's first phase of 300,000 tons/year MPP and petroleum deep processing projects will all be put into operation one after another in 2023. The new projects will be put into operation one after another, and putting new projects into operation one after another will become the company's main growth point in the future.
The majority shareholders' participation in the fixed increase subscription showed confidence, and the polyolefin project promoted leaps and bounds.
In October 2022, the company planned to raise no more than 1 billion yuan to invest in the “Huizhou Tuo 300,000 tons/year polyolefin new material project” and the “Yueyang Xingchang R&D Center Project”. The planned subscription ratio of Sinopec Asset Company, the controlling shareholder, was not less than 22.91%, demonstrating confidence in the company's future development prospects. At present, the company already has a certain first-mover advantage in technical fields such as special polypropylene catalysts, polymerization process development, and polyolefin processing modification. The first phase of the Huizhou Development Project is expected to be completed in March 2023. The company used the layout of a high-end polyolefin project as an opportunity to optimize the product structure and ushered in the company's second take-off.
Investment advice
We expect the company's revenue to be 3,064 million yuan, 4,509 million yuan, and 5.973 billion yuan in 2022-2024, and net profit of the mother to be 70 million yuan, 207 million yuan, and 347 million yuan. According to the latest closing prices, corresponding PE is 95 times, 32 times, and 19 times, respectively, maintaining the “recommended” rating.
Risk warning:
Oil prices fluctuated greatly, terminal demand fell short of expectations, and the company's project progress fell short of expectations.