The company released its report for the first quarter of 2023. The company's main revenue for the first quarter of 2023 was 239 million yuan, an increase of 106.7% over the previous year; net profit of the mother was 53.8707 million yuan, up 76.27% year on year; after deducting non-net profit of 53.3985 million yuan, up 103.15% year on year, up 46.80% month on month.
The year-on-year increase in operating income and profit in the first quarter was mainly due to an increase in orders during the reporting period. According to SSE e-Interactive, the company currently has sufficient product orders, and there has been no significant change in the unit price. At present, the first phase of Youhebo is producing 1,000 tons normally, and the second phase of 1,000-ton equipment is basically in place. Test run production in the second quarter; the third phase of 1,000 tons will begin after the second phase of 1,000 tons is put into production, and is expected to be put into operation within the year. Currently, Uhebo products are relatively single. In the future, the product scale will be increased and profitability will be enhanced.
The military and civilian industries are in high demand, and application fields are constantly expanding. As the international situation continues to be tense, the investment of various countries in the field of security continues to increase. As an essential strategic material for modern national defense, ultra-high molecular weight polyethylene fiber will lead to a continuous and rapid increase in demand for “quality” and “quantity” of bulletproof equipment with the commencement of military equipment work.
Market demand will also be further released in new application fields such as deep-sea aquaculture cages, deep-well oil extraction, protective clothing, transportation, fire hoses, conveyor belt reinforcement, fiber-optic cable reinforcement, and short fiber reinforced concrete.
Combining endogenous development with epitaxial mergers and acquisitions, central enterprises of the country are expected to experience a revaluation.
The company strategically lays out development space through a combination of endogenous development and outbound mergers and acquisitions, and completes mergers and acquisitions projects in the same industry with its own capital, which helps the company quickly increase production capacity, expand production scale, and better meet the needs of downstream markets. The actual controller of the company is China Development and Investment Group Co., Ltd., and the State Council's State-owned Assets Administration Commission holds 100% of the shares of SDIC. The actual controller of the company, SDIC, is an important state-owned enterprise directly managed by the central government. The improvement of the company's core competitiveness and the continuous deepening of the layout of innovative fields are expected to usher in a revaluation of value.
Profit forecast: We expect the company's net profit of 2023-2025 to be 222, 286, and 335 million yuan respectively. Referring to comparable company valuations, we gave the company 27 times PE in 2023. The target price was 26.73 yuan. For the first time, coverage gave a superior market rating.
Risk warning: the risk of new production capacity in the market; the risk that demand in the downstream market falls short of expectations; the risk that the progress of production capacity under construction falls short of expectations; the risk of a sharp increase in raw material costs.