Event: the company released its semi-annual report of 2023 and reported that its operating income in the first half of 2023 was 1.338 billion yuan, an increase of 31.09% over the same period last year. The net profit attributed to the shareholders of the parent company was 250 million yuan, an increase of 71.05% over the same period last year, and the net profit after deducting non-return was 232 million yuan, an increase of 110.17% over the same period last year, and basic earnings per share was 1.44 yuan.
Main points of investment:
The company's revenue is growing against the trend and its performance in the first half of the year is outstanding. The company is a leading domestic supplier of lubricating oil additives and a major global supplier of carbonless paper chromogenic agents, and it is also the first A-share listed company in the field of lubricating oil additives. Mainly engaged in oil additives, carbonless paper chromogenic agents and other fine chemical products research and development, production and sales. According to the summary of the company's investor research, the company's downstream customers strategically hoarded goods in 2022 with a high inventory level, and continued to be in the destocking stage in the first half of 2023, and the demand in the lower reaches of the industry as a whole was sluggish. However, the company seized on the accelerated trend of industry supply chain reconstruction and domestic substitution, increased efforts to promote composite agents, actively carried out core customer access certification, and the company's revenue grew against the trend. In the first half of the year, the company achieved operating income of 1.338 billion yuan, an increase of 31.09% over the same period last year. Among them, the business income of lubricating oil additives was 1.301 billion yuan, an increase of 35.87% over the same period last year, and turnover accounted for 97.25%, which was the main source of income for the company.
In terms of profitability, the company's comprehensive gross profit margin in the first half of 2023 was 32.63%, an increase of 6.92pct over the same period last year. Among them, the gross profit margin of lubricating oil additives was 32.92%, an increase of 6.8pct over the same period last year, mainly due to an increase in the proportion of sales revenue of high gross profit margin composite agents, accounting for 64.8% in the first half of the year. The rate of sales / management / finance / R & D expenses of the company is 2.77% 10.69% 1.41% and 4.35% respectively, which is respectively-0.73/-0.12/+1.64/-0.10pct compared with the same period last year. The increase in financial expenses is mainly due to the decrease in exchange rate earnings and interest income. The rate of sales, management and financial expenses totaled 12.04%, an increase of 0.78pct over the same period last year. Under the influence of the stable control of expense rate during the period of rising gross profit margin, the company's comprehensive net profit rate in the first half of the year was 18.75%, an increase of 4.44pct over the same period last year. Under the combined influence of the company's revenue and net interest rate, the company achieved a net profit of 250 million yuan in the first half of the year, an increase of 71.05% over the same period last year, and 232 million yuan after deducting it, an increase of 110.17% over the same period last year.
Judging from the single-quarter results, the company achieved operating income of 714 million yuan in the second quarter, an increase of 14.35% over the same period last year, 14.44% month-on-month growth, 153 million yuan net profit, an increase of 62.09% over the same period last year and 57.02% month-on-month growth. Net profit after deduction was 144 million yuan, up 63.72% year-on-year and 63.04% month-on-month. According to Zhuochuang Information, the price of lube base oil, the company's main raw material, fell from 8037 yuan / ton in the first quarter to 7316 yuan / ton, down 8% from the same period last year. 97% of the company. While raw material prices are affected by the relationship between supply and demand, according to the company's investor research summary, the price adjustment of product sales in the second quarter is relatively small, and the profit space is expanding, so the company's second-quarter net profit increased significantly compared with the same period last year.
The company actively increases its market share and has a broad space for growth in the future. For a long time, the global lubricating oil additive market has formed a market pattern dominated by four international lubricating oil additives: Lubrizol, Yinglian, Chevron Corp and Yafuton, occupying about 85% of the global additive market share. Geopolitical conflicts in recent years and black swan events such as the snowstorm in the United States in 2021 have brought great challenges to the global lubricant supply chain. The company seizes the opportunity of the reconstruction of the international supply chain system and the acceleration of domestic import substitution in the industry to actively increase its market share.
According to Klein and Shanghai Lubricating Oil Industry Association, the global demand for lubricating oil additives will increase to 5.43 million tons in 2023, with a market size of about US $18.5 billion. As one of the largest markets for lubricating oil additives, China has a demand of more than 900,000 tons. According to the company's 2022 performance presentation, the company's domestic market share continues to increase, but it still accounts for less than 3.5%, and there is broad room for growth in the future.
The company has expanded its production capacity rapidly and actively grabbed the global market share. By the first half of 2023, the company's existing single agent production capacity of lubricating oil additives has exceeded 200,000 tons / year, and the production capacity under construction is 550000 tons / year, of which 150,000 tons / year lube additive project, the first phase of 60,000 tons / year production capacity has been put into production in the third quarter of 2022, the second phase 90,000 tons / year will be put into production by the end of 2023.
At the same time, the company's 460,000 tons / year lubricating oil additive project is also under active construction, and the future production capacity of Xinxiang base will exceed 700,000 tons / year. With the active promotion of the company's fund-raising projects and the continuous improvement of production capacity, the company's market share of lubricating oil additives in the world will further increase, and the company's performance is expected to usher in greater growth.
Profitability and investment advice: we estimate that the company's operating income from 2023 to 2025 will be RMB 51.54 billion, net profit will be RMB 1.89 billion, EPS is RMB 2.62 and PE is 12.27 times that of 19.30max 15.45.
Considering the development prospect of the lubricating oil additive industry and the company's industry status, it covers us for the first time to give "overweight" investment rating.
Risk hint: the construction progress of the company's fund-raising project is not as expected, the introduction of customers is not as expected, the risk of overseas market expansion, and the decline of demand in the automobile industry.