Gimu's net profit in 2022 was +19.66% year on year, and the performance was in line with expectations, maintaining “buy” rating companies to achieve revenue of 713 million yuan in 2022, or -18.99% year on year; to achieve net profit of 120 million yuan, +19.66% year on year. Among them, Q4 achieved revenue of 136 million yuan in a single quarter, -43.61% year on year and -19.26% month on month; net profit returned to the mother was 158.4552 million yuan, -50.21% year on year and -46.53% month on month. The company's performance was in line with expectations.

Considering the decline in the polyetheramine market and the progress of the company's COC construction, we lowered the company's profit forecast for 2023 and 2024 and added a profit forecast for 2025. The company's net profit for 2023-2025 is estimated to be 0.79, 1.63 (previous values were 144, 3.28), 482 million yuan, corresponding to EPS of 0.89, 1.86 (previous values were 1.64, 3.73), 5.48 yuan/share. The current stock price of PE is 53.1, 25.6, 8.7 times. We are optimistic that the company, as a domestic polyetheramine leader, and that a breakthrough in the industrialization of COC for new materials is imminent. The prospects are promising, and the “buy” rating will be maintained.

The company's profit margin for fatty amines is high, and the quantity and price of optical materials are stable

In 2022, the sales volume of the company's main products, fatty amines and optical materials, was 17,946 and 4,254 tons respectively, -18.41% and -3.01%, respectively; sales revenue was 491 million and 221 million yuan respectively, -24.06% and -4.95%, respectively; the average sales prices (excluding tax) were 27,374 and 51,968 yuan/ton, respectively, -6.92% and -2.00% compared with the same period last year.

Prices of the company's main raw materials declined sharply. The average purchase prices of propane oxide, propylene glycol, camphene, and methacrylic acid were -37.64%, -29.69%, -17.36%, and -8.01%, respectively. The company's overall gross margin in 2022 was 30.29%, +7.07 pcts year on year; net interest rate was 16.77%, +5.39 pcts year on year. In the first three quarters of 2022, due to the epidemic, both the upstream and downstream industrial chains were affected to a certain extent. The company took the opportunity to adjust the annual maintenance schedule of the equipment, which led to a brief decline in the production and sales of the company's products.

The key COC indicators have all met expectations. It is expected that the installation and trial production of the kiloton production line will be completed in the second half of 2023. According to the company's announcement, the company's “development of cycloolefin copolymer materials” project has cleared the process route and completed the preparation of samples of kilogram cycloolefin copolymers. The key indicators have all met expectations. It is expected that the installation and trial production of the kiloton production line will be completed in the second half of 2023, aiming to achieve mass production of the kiloton production line by 2023. Furthermore, the company is actively promoting preliminary preparation and construction work for the Qianjiang project, with the aim of starting construction in 2023Q2. At the same time, the company aimed at cutting-edge applications of COC and set up a new project for initial research on COC as an artificial bone material.

Risk warning: raw material prices fluctuate, demand growth falls short of expectations, COC/COP development falls short of expectations, etc.