Q1 Net profit was -16.23% year on year. Optimistic about the company's long-term development, maintaining the “buy” rating company achieved revenue of 350 million yuan in the first quarter of 2023, -6.97% year on year; net profit of the mother was 70,267,500 yuan, -16.23% year on year. Net cash flow from operating activities was 49,615,500 yuan, +28.26% year on year. Due to the continued decline in the prices of raw materials such as maleic anhydride and butadiene, the company's product prices were under pressure, and revenue and profits declined. We believe that with the orderly implementation of the company's new construction projects, it will grow steadily in the future. Considering the current situation in the industry, we lowered the company's profit forecast. The estimated net profit for 2023-2025 was 4.29, 5.63, 7.07 (previous value was 502, 663, 827), and the corresponding EPS was 1.45, 1.90, and 2.39 yuan/share respectively. The current stock price corresponding to 2023-2025 PE is 14.7, 11.2, and 8.9 times, respectively. We are optimistic about the company's future development. Currently, it also has outstanding price-performance ratio and maintains its “buy” rating.
Downstream demand, represented by the wind power sector, is expected to increase in 2023. The company's maleic anhydride derivatives, which have a lot of room for growth, had revenue of 1,224 billion yuan in 2022, an increase of 20.98% over the previous year. Among them, the number of products used in the wind power sector exceeded 6,500 tons, accounting for about 10% of overall sales. In 2022, the company produced and sold 702 and 67,600 tons of maleic anhydride derivatives, respectively, and the capacity utilization rate was close to 100%. 2023Q1 responded positively to changes in the business environment, deepened the supply chain layout, and released production capacity for new equipment. Sales of maleic anhydride derivatives increased by more than 25% year-on-year. Although the company's sales increased significantly, due to the influence of raw material prices, the company's product prices were lower than in the same period in 2022. We believe that the installed capacity of wind power in China and the penetration rate of the pultrusion process will increase together in 2023. At the same time, other downstream fields of maleic anhydride derivatives, such as power insulation materials, coatings, and electronic packaging materials, are expected to continue to improve marginally, and the company can be expected to grow steadily over the long term.
The company's multiple production capacity is being built in an orderly manner, and maleic anhydride derivatives are firmly established. According to the company's announcement, the company's main product, maleic anhydride derivatives, currently has a production capacity of 710,000 tons, with a production capacity of 50,000 tons under construction, including 10,000 tons/year of tetrahydrophthalic anhydride, 10,000 tons/year of hexahydrophthalic anhydride, 21,000 tons/year of methyltetrahydrophthalic anhydride, 5,000 tons/year of methylhexahydrophthalic anhydride, 2,000 tons/year of nadic anhydride and 2,000 tons/year of methylnadic anhydride. Another 3,000 tons/year for hydrogenated bisphenol A and 200 tons/year for electronic chemicals are under construction. Construction is expected to be completed in 2023. A number of production capacities under construction provide support for the company's long-term development.
Risk warning: Production capacity construction progress falls short of expectations, demand for downstream applications falls short of expectations, and raw material prices fluctuate.