Report guide
The company released its semi-annual report for 2023, with revenue of 850 million yuan, down 4.09% from the same period last year; net profit of 192 million yuan, down 4.54% from the same period last year; and net profit of 177 million yuan, down 9.37% from the same period last year. Of this total, Q2 achieved 435 million yuan in revenue in a single quarter, down 2.35% from the same period last year, up 4.74% from the previous year; and the net profit from its mother was 108 million yuan, down 8.02% from the same period last year and up 28.29% from the previous year. The performance is in line with expectations.
Main points of investment
Silicon dioxide price increase and decline, short-term product profitability declined in the first half of the year as the tire market gradually picked up, driving the company's silicon dioxide production capacity to further release, the company's production and sales increased year-on-year. 23H1's silicon dioxide production and sales volume were 135000 tons and 138000 tons respectively, an increase of 11.64 percent and 11.83 percent respectively over the same period last year. Of this total, Q2 sold 73100 tons in a single quarter, an increase of 20.12% and 12.31% respectively over the same period last month. In terms of product prices, the average price of silicon dioxide of 23H1 Company was 6067 yuan / ton, down 9.13% from the same period last year, of which the average price of Q2 was 5886 yuan / ton, down 12.99% and 6.15% respectively from the same month. The decline in the average price of products was mainly due to the reduction of domestic silica prices. The decline in the average price of products has led to a decline in the company's profitability. 23H1's gross profit margin was 25.57%, down 3.72% PCT; net profit rate was 22.56%, and 0.11 PCT year-on-year. The financial expenses of the company in the first half of the year are-49.19 million yuan, of which interest income and exchange earnings are expected to exceed 50 million yuan. The net operating cash flow in the first half of the year was 148 million yuan, a decrease of about 100 million yuan compared with the same period last year, mainly due to the return of about 89 million yuan of notes due and payable in its own cash and an increase of 34 million in taxes paid in the first half of the year. The company's inventory turnover rate was 3.27, an increase over the same period last year; the accounts receivable turnover rate was 1.73, a decrease over the same period last year.
EU "carbon tariff" officially passed, rice husk ash silica prospect is good according to the company announcement, on April 25, the European Council voted to pass the carbon Border Adjustment Mechanism (CBAM). In the import and export of goods trade, the EU will charge corresponding fees or quotas for imported products with higher carbon emissions, which will be formally implemented from January 1, 2026. The company's Anhui Axi Biomass (Rice Husk) project uses rice husk instead of natural gas as fuel and rice husk ash produced by rice husk combustion as silicon instead of quartz sand to produce highly dispersed silica, which can greatly reduce carbon dioxide emissions. The current project has achieved environmental impact assessment and is under construction. With the landing of the above-mentioned projects, the company's rice husk gray-green silica is expected to further enhance the company's market competitiveness.
Projects under construction are progressing steadily, with new production capacity and new products opening up the company's existing silica production capacity of 330000 tons, of which 75000 tons are under construction and 25000 tons are under construction, of which 25000 tons of Thailand Phase II have been approved by EIA and are under construction. After all the above projects are landed, the company's production capacity will be increased to 430000 tons, which is expected to further increase the market share of the company's products. In addition, in recent years, while consolidating the production capacity of highly dispersed silicon dioxide, the company has also developed a series of products such as silicone rubber, oral care, silica microspheres and so on. at present, silica microspheres have obtained small batch commercial orders. the subsequent launch of new production capacity and new products is expected to open up the company's growth space.
Profit forecast and valuation
Taking into account the decline in the average price of silicon dioxide and the short-term pressure on the gross profit margin of the product, the company's 23-25 net profit is reduced to 4.04 billion yuan, corresponding to PE of 15.64,13.16,10.78 times. The company is the leader of silica in China, with the gradual improvement of the permeability of green tires, the demand for silica continues to improve. In addition, the company's layout of silicone rubber and toothpaste silica products is expected to open up new profit space. Maintain a "buy" rating.
Risk hint
Raw material prices fluctuate sharply; customer development is not as expected; capacity investment is not as expected; exchange risk and so on.