The company released its semi-annual report for 2023. In the first half of the year, the company achieved revenue of 215 million yuan, a year-on-year increase of 12.18%, net profit of 55 million yuan, a year-on-year increase of 22.24%, minus non-return net profit of 48 million yuan, a year-on-year increase of 16.27%. Among them, Q2 achieved revenue of 116 million yuan, a year-on-year increase of 12.34%, a month-on-month increase of 16.93%, net profit of 0.3 million yuan over the previous year, an increase of 17.99% over the previous year. %. The company focused on the new nanomaterials business, and achieved steady growth in sales volume and quarterly performance.
The decline in the prices of raw materials such as soda ash and concentrated sulfuric acid has led to an increase in the profit level of nano-silicon dioxide. In the first half of 2023, the prices of soda ash (raw material for solid water glass) and concentrated sulfuric acid weakened. According to Baichuan Yingfu data, the average price of young soda ash and concentrated sulfuric acid in the first half of the year was 2507 yuan/ton and 168 yuan/ton, respectively, down 5% and 78% from the previous year, driving a recovery in the profit of nano silicon dioxide products. The gross margin of the new nano materials business increased 2.91 pct to 42.51% year on year in the first half of the year.
Focusing on the new nanomaterials business, the expansion of the dual base is imminent. By the end of 2022, the company currently has a production capacity of 14,000 tons of nano-silicon dioxide and 10,000 tons of nano-alumina. Among the projects under construction, the Anhui base is expected to be put into operation in November 2023, and the Hunan base will add 20,000 tons of ultra-fine silica aerogel products per year. Furthermore, the company announced in March 2023 that it plans to invest 1 billion yuan to build the second phase of the Ma'anshan project to add 20,000 tons of catalyst carriers and 20,000 tons of water-based resin production capacity. The construction of the second production base, Anhui Lingwei, will help the company support customers in East China nearby, break through existing production capacity bottlenecks, and increase market share rate. In addition to the construction of the Anhui base, the company has laid out 2,000 tons of nano-alumina and 26,000 tons of silica for electronic materials in Lengshuijiang 3A. The two bases have a total planned production capacity of 80,000 tons of nano-silicon dioxide and 30,000 tons of nano-alumina, actively seizing opportunities to replace domestic silica in the high-end sector.
Maintain profit forecasts and maintain “increase holdings” ratings: The company uses matting agents and adsorbents as its foothold, adheres to the middle and high-end development direction, continuously optimizes the product structure, and enhances the added value of the product. After production capacity at the Anhui base is put into operation, the company's market share in fields such as opening agents and anti-rust pigments is expected to increase further.
We expect the company's operating income from 2023-2025 to be 502 million, 689 million yuan, and 873 million yuan respectively, net profit to parent to be 1.17 million, 1.76 million yuan, and 226 million yuan respectively. For PE, it is 28X, 18X, and 14X respectively, maintaining the “increase in holdings” rating.
Risk warning: project construction falls short of expectations; risk of declining demand.