2023H1 profit fell 78.3%, COC's intended orders exceeded expectations, maintaining the “buy” rating company 2023H1 to achieve revenue of 279 million yuan, or -31.8% year-on-year; achieving net profit of 16.182 million yuan, or -78.3% year-on-year. Among them, Q2 achieved revenue of 136 million yuan in a single quarter, -17.8% year-on-year and -5.4% month-on-month; realized net profit of 9.999 million yuan, -68.3% year-on-year, and +58.0% month-on-month. Due to falling raw material prices, the main market is at an industry trough. As a result, the prices of the company's products have also dropped sharply, and the company's performance has declined cyclically.
We lowered the company's profit forecast for 2023 and maintained the profit forecast for 2024 and 2025. We expect the company's net profit from 2023-2025 to be 0.44 (previous value 0.79), 163, and 482 million yuan, corresponding EPS to 0.50, 1.86, and 5.48 yuan/share, and the current stock price corresponding to PE is 104.0, 28.1, and 9.5 times. We are optimistic that the company is the leader in polyetheramine in China and that a breakthrough in the industrialization of the new material COC is imminent. The prospects are promising, and the “buy” rating is maintained.
The polyetheramine boom is declining, and the market is expected to bottom out and pick up in the future
The sales volume of the company's main products, aliphatic amines and optical materials in 2023H1, was 10,365 and 2,417 tons, respectively, +15.0% and +16.5%, respectively; sales revenue was 1.83 million yuan and 96 million yuan, respectively, -37.6% and -17.1%, respectively; average sales prices (excluding tax) were 17,652 and 39,691 yuan/ton, respectively, -45.7% and -28.9%, respectively.
Prices of the company's main raw materials such as propane oxide, propylene glycol, and camphene have also declined sharply. The company's overall gross margin in 2023H1 is 15.7% and net interest rate is 5.65%. The company's gross profit margin and net interest rate levels are close to their lowest points since 2011, and the market is expected to bottom out and pick up in the future.
Intended COC orders have far exceeded expectations, or may dispel some of the market's concerns about digesting the company's production capacity. According to the company's announcement, the company's COC products have carried out preliminary work such as product certification and testing and signed intended cooperation agreements with many well-known enterprises in the downstream application field. In the field of optics, the company has reached an agreement of intent with a listed company that produces optical components related to automotive HUDs. The agreement stipulates future procurement plans of at least 2,500 tons per year. As a material for optical lenses for mobile phones, the company's samples have been tested by many downstream companies, and the test response has been quite good. Currently, agreements of intent have been reached with well-known listed companies. In the medical field, the company has reached agreements of intent with well-known downstream pharmaceutical companies. The order volume exceeded expectations. The company's mass production project is being built as scheduled, and this announcement may partially resolve the company's future COC production capacity digestion issues that the market has always been concerned about.
Risk warning: raw material prices fluctuate, demand growth falls short of expectations, COC/COP development falls short of expectations, etc.