Incidents:
On April 6, the company released its 2022 annual report. In '22, the company achieved operating income of 3.22 billion yuan, an increase of 65.03% over the previous year; net profit attributable to shareholders of listed companies of 80 million yuan, an increase of 25.36% over the previous year; net profit returned to the mother after deduction of 80 million yuan, an increase of 27.14% over the previous year; and basic earnings per share of 0.27 yuan.
The performance is in line with our expectations, and the boom in all sectors continues
The profitability of the company's main products in the energy chemical sector and the new chemical materials sector all increased in 2022, and the overall performance was in line with our expectations. Crude oil soared in '22, and the MTBE and iso-octane businesses were quite prosperous. The average prices of the two reached 7,358 yuan/ton and 7,606 yuan/ton respectively during the year, up 28.30% and 35.46% over the previous year. Foreign production capacity for specialty phenols in the new chemical materials sector was affected by the war, and the boom in the specialty phenol business was boosted, driving the overall gross margin of the new materials sector to rise 6.23 pct to 22.35%.
In 2023, when marginal interest rate hikes slow and geopolitical conflicts continue to compound OPEC+ active production limits, oil prices are expected to remain at a high level, and the company's energy sector boom continues; polypropylene in the new materials sector benefits from falling propylene prices and consumption recovery, and isooctane beneficiary countries' 6B gasoline standards, and sector sentiment is expected to continue to rise.
At the same time, the company's R&D expenses increased significantly in '22. Not only did it increase its talent introduction efforts. The number of R&D personnel increased from 26 in '21 to 73 in '22; it also actively implemented industrial transformation and upgrading, greatly increasing R&D investment, and successively invested in more than 10 R&D projects, including special phenols, metal-organic compounds, and polypropylene modifications, to ensure the company's long-term growth.
Relying on catalyst R&D capabilities to develop high-end polyolefin
The company has strong catalyst research and development capabilities. It is the “first person” in China to break the monopoly of metal-rich polyolefin catalyst technology abroad. Currently, it has built a 300,000-ton high-end polypropylene project in Huizhou. The catalyst and complete technology are core technologies developed independently by the company, and the rich polypropylene series products produced can replace imports. In addition, the company's petrochemical exhaust's non-precious metal catalysts have solved the industry's pain points and has great industrial potential. Pay attention to the possibility of horizontal expansion of the company's relevant capabilities.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-25 to be 43/60/76 billion yuan (the original value in 23-24 was 52/6.7 billion yuan), the corresponding growth rate was 32%/40%/27%, respectively, and the net profit of the mother was 2.8/46/ 640 million yuan (the original value in 23-24 was 35/ 520 million yuan), the corresponding growth rate of 243%/68%/39%, and EPS was 0.90/1.50/2.08 yuan/share respectively. Given the company's strong R&D capabilities and continuous industrialization of results, our company maintained the target price of 28.66 yuan. The corresponding 24-year PE was 19 times, maintaining the “buy” rating.
Risk warning: The promotion of production capacity under construction and marketing fell short of expectations, and crude oil prices fell sharply