Incidents:
On the evening of April 25, the company announced its 2023 quarterly report. The company achieved operating income of 113 million yuan, an increase of 13.60% over the previous year; Guimu's net profit of 26.32 million yuan, an increase of 1.89% over the previous year; net profit of 22.67 million yuan after deduction, a decrease of 2.56% over the previous year; and basic earnings per share of 0.20 yuan.
The new workshop was not profitable at the beginning of operation. The company's gross margin fell slightly by 2.92pct to 34.57% month-on-month; in addition, the company's performance in the first quarter of '23 was basically the same as the first workshop, the second workshop and supporting facilities of the “annual output of 8,000 tons of aromatic ketones and their supporting projects”. Depreciation costs of plant and equipment increased, while the new project was still in the stage of customer verification and capacity climbing, and the company's gross margin fell slightly by 2.92pct to 34.57% month-on-month; in addition, the company's equity incentive expenses also led to a high increase in management costs. With the increase in the capacity utilization rate of the company's first and second workshops, the company's profitability is expected to improve significantly in the second quarter.
DFBP's business boom continues, and the HAP market is expanding rapidly
Production capacity expansion in the DFBP industry has been slow, while rapid development in the automotive, aerospace, medical and other fields has driven the continuous rapid growth of special engineering plastics PEEK and its raw material DFBP. Continued supply tightening has led to a continuous upward trend in the DFBP boom. As a leading enterprise in the industry, the company has fully benefited from the upward trend of DFBP; as a new cosmetic antiseptic raw material, HAP is safe, non-toxic and has good antioxidant effects, in line with domestic consumption upgrading trends. There is plenty of room. As a domestic HAP leader, the company is deeply tied to international giant De Zhi Xin of cosmetic ingredients. After the new plant is put into operation and goes bankrupt, the HAP business is expected to expand rapidly.
Deeply involved in aromatic ketone chemicals and accumulated deep technical experience
The company has been deeply involved in aromatic ketone fine chemicals for more than ten years and has accumulated deep technical experience. DFBP, HAP and other products have achieved outstanding market positions. The company's old factory has a total production capacity of 4,200 tons, and 8,000 tons of additional raised production capacity are gradually being put in, and there is plenty of room for growth.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-25 to be 62/81/1.0 billion yuan respectively, with a corresponding growth rate of 56%/31%/22% respectively, and the return mother's net profit of 1.62/209/251 yuan respectively. The corresponding growth rate is 52%/29%/20% respectively, EPS is 1.2/1.55/1.87 yuan respectively, and the 3-year CAGR is 33%. In view of the positive pattern of the DFBP and HAP industry and the significant expansion of the company's production capacity, we maintained the company's target price of 31.0 yuan and maintained the “buy” rating.
Risk warning: projects under construction fall short of expectations, competition increases risks, and environmental protection costs rise