Description of the event: On April 26, 2023, the company released the 2022 annual report and the first quarter 2023 report. The company achieved revenue of 1,010 million yuan for the full year of 2022, +14.88% year on year; net profit of the mother was 235 million yuan, +21.28% year on year; net profit of the non-return mother was 226 million yuan, 25.95% year on year. At the same time, Q1 2023 achieved revenue of 248 million yuan in a single quarter, -3.82% year on year, -0.80% month on month; Guimu's net profit was 501 million yuan, -26.39% year on year, +10.87% month on month. The results for the full year and first quarter were basically in line with expectations.
Issuing convertible bonds to raise funds to build LiFSi and strengthen the direction of new energy sources: In 2022, the company announced the issuance of convertible corporate bonds to unspecified targets, and plans to raise no more than 650 million yuan to build a new lithium salt (LiFSi) project for 10,000 tons/year of lithium batteries. On the one hand, the company follows the development trend of lithium salts. Compared with LiF6, lithium batteries with LiFSi added have higher energy density and better fast charging performance, which is in line with the trend of high nickelization of ternary lithium batteries. On the other hand, the company makes full use of its advantages to produce LiFSi using its own battery-grade sulfoxide chloride as a raw material to obtain higher quality products. According to the company announcement, the construction period of the project is 2 years, and it is expected to be gradually put into operation in 2025, with significant subsequent increases.
Using sulfoxide chloride as a platform, new construction and expansion of multiple products increased profits: the “one chain, two wings” layout created by the company was gradually improved, and the new material product matrix continued to be rich. PEKK: The company is currently the first domestic enterprise that can produce PEKK on a large scale. The first phase of the production plant with a capacity of 1000 tons/year has been installed, and trial production and commissioning by product sequence is being carried out. Product release is imminent, and there is broad scope for domestic substitution. Aramid polymer monomer: In August 2022, the company's production capacity increased to 31,000 tons/year, further consolidating the product's leading position in China. Profitability increased significantly in the context of the expansion of production by many downstream aramid companies. Chloroether: In April 2022, the company's production capacity increased to 6,000 tons/year, which is mainly used as one of the raw materials for the production of low-toxic and efficient early broad-spectrum selective sprouting herbicide in rice fields. Chloroacetyl chloride: Mainly used as an acylating agent, extraction solvent, and organic synthesis intermediate. The company built 10,000 tons/year and put into trial production in February 2023. At the same time, the company also plans to include a variety of hydroxychloride and acyl chloride series products, which are rich in types and have broad room for future growth.
Investment suggestions: The company has successively built a number of new material products, including domestic replacement PEKK; at the same time, it has expanded leading products, sulfoxide chloride and aramid polymer monomers, with significant future increases; in addition, the company's fixed lithium salt project opens up room for future growth. We expect the company to achieve operating income of 1,312/1747/2,468 million yuan in 2023-2025, and net profit of 353/498/692 million yuan. The corresponding PE was 29.31/20.80/14.96 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: raw material prices have risen sharply; production expansion of new products such as chlorinated chemicals fell short of expectations; downstream demand fell short of expectations