The company published its 2022 annual report and 2023 quarterly report. In 2022, the company achieved revenue of 2,965 million yuan, +72.96% year on year; the net profit returned to the mother was 152 million yuan, +405.37% year on year. 2023Q1 achieved revenue of 416 million yuan, or -34.06% year on year, and achieved net profit of 54 million yuan to the mother, +164.93% year on year.

White oil: The release of production capacity was compounded by price increases, and gross profit increased dramatically. The company's 12,000 cubic meters/hour light hydrocarbon comprehensive utilization plant was officially put into operation at the end of June 2022. The hydrogen supply for the 400,000 tons of environmentally friendly aromatic hydrocarbon oil project was stable and the white oil capacity utilization rate continued to increase. In 2022, the company achieved 202,000 tons of white oil production, an increase of 155.7% over the previous year; and achieved sales of 198,000 tons, an increase of 164% over the previous year. The price of white oil continued to rise in 2022 due to cost support brought about by rising crude oil prices and supply tightening caused by domestic equipment maintenance. Benefiting from the release of production capacity and price increases, the company's white oil products achieved revenue of 1.39 billion yuan in 2022, an increase of 109.5% over the previous year; gross profit was 180 million yuan, turning a loss into a profit over the previous year.

Heavy aromatic hydrocarbons: New raw material channels enhance economic efficiency, and the high boom in the terminal market boosts product demand. In 2022, the company's first “going global” strategic platform, Bohui Singapore, was established, which effectively broadened raw material supply channels. The capacity utilization rate of heavy aromatic hydrocarbon production plants increased by 28.9 pct over the same period last year. In addition, some of the company's heavy aromatic hydrocarbons are used to produce oil-based needle coke, and downstream are used in graphite electrodes and lithium battery anode materials. In 2022, benefiting from boosting demand for new energy vehicles and energy storage, shipments of lithium battery anode materials increased 90.3% year-on-year; with the development of electric furnace steelmaking technology, production of ultra-high power graphite electrodes increased 15.7% year-on-year. The boom in the terminal market boosted demand for heavy aromatic hydrocarbons. In 2022, the company achieved sales of 234,000 tons of heavy aromatic hydrocarbons, an increase of 17.6% over the previous year.

Aromatics oil deep processing projects can be arranged, and the release of high-value-added products can be expected. The company will use 400,000 tons of environmentally friendly aromatic oil as raw materials to extend the industrial chain downstream, and build 100,000 tons/year of deep processing and production of food-grade/cosmetic grade white oil products and 80,000 tons/year of young white oil supplementary refining equipment. It is expected to increase the added value of products and the company's overall profit level in the future, and effectively reduce domestic import dependence on high-end white oil (food, medicine, cosmetic grade). It is expected that after the project is put into operation in 2024, it will generate annual sales revenue of 7.2 billion yuan and net profit of 90 million yuan.

Profit forecasts and investment recommendations. The company is actively developing new products and technologies, and production capacity will be launched one after another in the future, and performance is expected to continue to grow. We expect the EPS of Bohui Co., Ltd. from 2023 to 2025 to be 1.72, 2.28, and 2.71 yuan respectively. Referring to the valuation level of comparable companies, they were given 15-18 times PE in 2023, and the corresponding reasonable value range was 25.80-30.96 yuan, giving them a “superior market” rating.

Risk warning. Product prices fluctuated greatly, downstream demand fell short of expectations, progress of projects under construction fell short of expectations, etc.