Introduction: Performance is in line with expectations, demand for TPU is expected to recover, and new projects such as 120,000 tons of special isocyanates in Henan and 200,000 tons of TPU in Yantai are progressing steadily.
Incidents:
The company announced that revenue for the full year of 2022 was 1,475 million yuan, YOY +13.66%; Guimo's net profit was 111 million yuan, YOY -6.60%; 2023Q1 revenue was 318 million yuan, YOY -18.78%, QOQ +2.91%; Guimo's net profit was 24 million yuan, YOY +4.68%, and QOQ -20.00%.
Comment:
Earnings were in line with expectations. TPU profits rose month-on-month in March, waiting for demand to continue to recover.
According to Longzhong's information, the prices of 2023Q1 case TPU, shoe material TPU, and film TPU were 1.65/164/18,200 yuan/ton respectively, -3.5%/-2.8%/-9.2% over the previous month. The prices of pure MDI, BDO, and polyester polyols as raw materials were 1.90/1.21/15,300 yuan/ton, respectively, +1.6%/+6.9%/-2.8% over the previous month. The average monthly profit of TPU in the East China market was 2,379 yuan/ton, an increase of 560 yuan/ton over the previous month. The recovery in consumption after the epidemic this year may boost demand for terminals, and profits are expected to improve month-on-month.
The company continues to invest in R&D. At present, a small trial study on HDI trimers has been completed, and a breakthrough in the pilot test is being carried out to prepare technical preparations for the downstream extension of HDI in Henan.
In addition, in 2022, the company authorized 9 new international invention patents, 20 domestic invention patents, and 2 utility models.
The Henan integration project is progressing steadily. At present, the formalities required for the construction of the project have been completed (of which the 160,000 tons/year gas production facility was approved on February 23, 23), the procurement of the main equipment has been basically completed, and the construction of strong foundations, piles and pipe networks has been completed, and it is expected that it will be completed and put into operation in 2024.
Investment advice: We are optimistic that the company's special isocyanate project with an annual output of 120,000 tons in Henan is progressing steadily, opening up room for growth. The net profit attributable to the mother in 2023-2025 is estimated to be 139/2,20/353 million yuan. The PE corresponding to the current stock price is 47.52/30.06/18.74 respectively, giving it a “highly recommended” rating.
Risk warning: the risk of falling prices, the risk of falling demand, and the risk that the construction of special isocyanate projects falls short of expectations.