Events:

On the evening of April 17, the company released its annual report for 2022 and quarterly report for 2023. The company realized operating income of 2.965 billion yuan in 2022, an increase of 72.96% over the same period last year. Net profit returned to its mother was 152 million yuan, up 405.37% over the same period last year. Basic earnings per share was 0.86 yuan, up 405.88% over the same period last year.

In the first quarter of 2023, the company achieved revenue of 416 million yuan, a decrease of 34.06% over the same period last year; net profit of 53.87 million yuan, an increase of 164.93%; and basic earnings per share of 0.31 yuan, an increase of 164.91% over the same period last year.

The reversal of the predicament led to high profits, and the performance was in line with our expectations of a big increase in the company's performance in 2022 compared with the same period last year, mainly due to the widening of raw material procurement channels and the commissioning of 12000 square meters of hydrogen production units per hour. As a result, the capacity utilization of the company's heavy aromatics and white oil production units increased significantly in 2022, and the capacity utilization of heavy aromatics and white oil plants increased to 96% and 52% respectively in 22 years, which still has room for improvement. Q1's quarterly net profit in 2023 also increased sharply compared with the same period last year, but Q4 decreased by 20% compared with 2022, mainly due to the suspension of production and overhaul of the company's white oil plant in the first quarter.

The prosperity of white oil business is expected to rise

Domestic consumption recovery boosted white oil demand, supply-side European crude oil imports to the Middle East light oil to white oil production continued to decline, the future white oil market supply and demand is tight, the company's white oil business is expected to rise.

High-value utilization of aromatic oil to promote growth

The company has also arranged the production capacity of 100000 tons of food / pharmaceutical grade white oil and 80, 000 tons of light white oil by hydrofining industrial white oil. at the same time, it uses heavy aromatics plant to produce lithium electrode upstream needle coke slurry and explores in fields such as pitch-based carbon fiber. it is expected to continue to open the growth limit.

Earnings forecast, valuation and rating

In 2023-25, we gave the company an income of 42 pounds 48 / 5.9 billion yuan, a corresponding growth rate of 41 percent, 14 percent, 23 percent, a net profit of 3.3 pounds, 4.9 yuan and 650 million yuan, a corresponding growth rate of 117 percent, 49 percent, 31 percent, and a three-year CAGR of 62 percent, respectively. Taking into account the company's performance continues to cash, the business continues to extend to the high-end areas, we maintain the company's target price of 28.4 yuan, maintain the "buy" rating.

Risk tips: large fluctuations in product prices, production safety risks, and projects under construction are not as expected.