Event: on August 26, the company released its 2023 half-yearly report. In the first half of 2023, the company realized operating income of 1.66 billion yuan, down 5.08% from the same period last year; realized net profit of 97 million yuan, down 40.90% from the same period last year; and realized net profit of 89 million yuan after deducting non-return, down 43.22% from the same period last year. Among them, the company realized operating income of 995 million yuan in the second quarter, down 3.70% from the same period last year, an increase of 49.46% over the same period last year, and realized a net profit of 57 million yuan, down 32.55% from the same period last year, an increase of 39.95% over the same period last year.
The company's performance improved in the second quarter compared with the previous quarter. In the second quarter of 2023, the company's operating income of high-performance superplasticizer, superplasticizer and functional materials was 5.96,0.32 and 125 million yuan respectively, which was-9.30%, + 13.46% and-9.89% respectively compared with the second quarter of 2022, and + 58.67%, + 57.47% and + 28.18% respectively compared with the first quarter of 2023. Sales of high-performance superplasticizers, superplasticizers and functional materials reached 29.65,1.49 and 63200 tons respectively in the second quarter of 2023, which were-6.29%, + 4.93% and-13.19% respectively compared with the second quarter of 2022, and + 57.46%, + 52.04% and + 37.99% respectively compared with the first quarter of 2023.
In the second quarter of 2023, the average sales prices of high-performance superplasticizer, superplasticizer and functional materials were 2010 yuan / ton, 2172 yuan and 1970 yuan per ton, respectively, with year-on-year changes of-3.22%, + 8.13% and + 3.80% respectively over the second quarter of 2022. Compared with the first quarter of 2023, the month-on-month changes were + 0.77%, + 3.57% and-7.11%, respectively. The operating income and sales volume of the company's main products increased significantly in the second quarter compared with the first quarter, which led to the improvement of the company's performance in the second quarter.
The price of raw materials is falling, and the utilization rate of capacity affects profitability. In the first half of 2023, the company's sales gross profit margin and net sales profit margin were 36.13% and 8.08% respectively, respectively, compared with the year-on-year changes of + 0.05pct and-3.16pct in the first half of 2022.
From the perspective of raw materials, the purchasing prices of the company's major raw materials declined in the first half of 2023. According to the company announcement, the average purchase price of ethylene oxide, formaldehyde and acrylic acid decreased by 18.11%, 10.73% and 55.57% respectively in the first half of 2023 compared with the same period last year. However, due to the decline in the sales of high-performance superplasticizer and functional materials compared with the same period last year, the capacity utilization rate of the company declined slightly, and the fixed cost dilution effect weakened, which affected the company's profitability in the first half of the year.
The layout of the whole country will be further improved, and efforts will be made in overseas business and infrastructure business. According to the company's 2023 semi-annual report, the company's South China production base in Jiangmen, Guangdong has been officially put into production, and the national capacity layout has been further improved. The commissioning of Jiangmen base in Guangdong can provide strong support for the company to better serve customers in the "Great Bay area" and open up the South China market. In the first half of the year, the company stepped up its business development in the field of infrastructure engineering, and participated in the construction of a number of national and local key projects, such as the second Cross Harbour Tunnel in Jiaozhou Bay, Ye Batan Hydropower Station, Lufeng Nuclear Power Plant, Xiamen New Convention and Exhibition Center, Pinglu Canal Hub, etc. The company's overseas business has maintained rapid development, has achieved significant growth in a number of "Belt and Road Initiative" countries and regions, and the product categories sold in overseas regions have been continuously enriched.
Investment advice. With the recovery of downstream demand, we are optimistic about the long-term growth of water reducer leading enterprises. We expect the company's earnings per share from 2023 to 2025 to be 0.69,0.91,1.07 yuan respectively, corresponding to PE 18.05,13.74,11.65 respectively, maintaining a "buy" rating.
Risk hint: downstream demand is not as expected, project construction progress is not as expected, product price fluctuation risk.