The company released its semi-annual report for 2023. The company achieved revenue of 11.938 billion yuan in the first half of the year, a year-on-year decrease of 8.17%, net profit of 1,782 billion yuan, a year-on-year decrease of 49.71%, after deducting non-return net profit of 1,592 billion yuan, a year-on-year decrease of 54.87%; of these, Q2 achieved revenue of 6.209 billion yuan, a month-on-month increase of 8.38%, net profit of 780 million yuan, a year-on-year decrease of 632 million yuan, a year-on-year decrease of 34.16%. The main reason is that domestic and foreign demand is affected by weak global economic growth, inflation, etc., and poor performance. Prices of industrial silicon and silicone have gradually declined, and short-term performance is under pressure.
Domestic and foreign demand is weak, industrial silicon and silicone prices are falling, and we are waiting for the industry to recover. Since 2023, domestic and foreign demand has been affected by weak global economic growth and inflation. At the same time, market supply has increased widely, causing industrial silicon and silicone to continue to be weak since the fourth quarter of 2022. According to the company's announced business data, the overall average Q2 prices of industrial silicon and silicone decreased by 14% and 12% month-on-month to 13,483 yuan/ton and 13,349 yuan/ton, respectively. Judging from the profit level, according to Baichuan Yingfu data, as of August 27, 2023, the price difference between industrial silicon and silicone was 2,734 yuan/ton and 2,187 yuan/ton respectively. The current level of spread has fallen back to a historic low, waiting for industry demand to recover.
Relying on the advantages of industrial chain collaboration, the bottom of the industry boom bucked the trend, and product sales increased month-on-month.
Although the current product profit level has fallen back to the bottom, the company relies on “coal-electricity-silicon”
The cost advantage brought about by the collaborative development of the industrial chain is that the bottom of the industry boom is expanding against the trend, continuously increasing the production capacity and production and sales volume of industrial silicon and silicone, and showing strong profit resilience. Q2 industrial silicon and silicone achieved sales volume of 240,000 tons and 190,000 tons, respectively, up 33% and 16% from the previous month, with a further increase in market share.
Adjust profit forecasts and maintain purchase ratings: Considering that demand for industrial silicon and silicone terminals has been sluggish since the second half of 2022, and product prices have fallen back to a low point, we have adjusted our profit forecast. We expect the company's revenue for 2023-2025 to be 264.45, 362.75, and 47.08 billion yuan respectively (previously 309.42 billion yuan, 409.96 billion yuan, 55.242 billion yuan), and net profit of 3,538 billion yuan, 43.56 billion yuan, 5.328 billion yuan (previously: 5565, 69.33 billion yuan, 9.573 billion yuan), corresponding to PE division Maintains “buy” ratings for 21X, 17X, and 14X.
Risk warning: product prices fall; capacity expansion falls short of expectations; risk of falling demand