Yanggu Huatai released its 2023 semi-annual report. In the first half of 2023, the company achieved operating income of 1.664 billion yuan, down 8.67% from the same period last year, while the non-net profit deducted from the mother was 201 million yuan, down 29.74% from the same period last year.
Driven by the domestic market, the rubber additive industry as a whole has basically come out of the doldrums. According to the statistics of the China Rubber Industry Association, in the first half of 2023, the cumulative industrial output value of the rubber additive industry was 14.17 billion yuan, down 8% from the same period last year; sales revenue was 13.77 billion yuan, down 5% from the same period last year; exports were 4.637 billion yuan, down 10% from the same period last year; total output was 741000 tons, up 10% from the same period last year; and exports were 192000 tons, up 4% from the same period last year. As an important part of the rubber industry chain, about 70% rubber auxiliaries are used in the tire manufacturing industry. In the first half of this year, the operating rate of domestic tire enterprises was at a high level. From January to June 2023, the cumulative output of rubber tyres in China was 475 million, an increase of 13.9% over the same period last year. In the first quarter of 2023, overseas and domestic demand shrank synchronously, and the rubber additive market was relatively depressed, but since the second quarter, the export performance of domestic tires has been good, and the demand of upstream enterprises for rubber auxiliaries for tires has obviously rebounded.
The company insists on technological innovation, and a number of production capacity projects under construction have been launched one after another. In recent years, through continuous technical research, the company has formed a number of core technologies. The successful research and development of the new green process of accelerator M and NS has solved the problem of "three wastes", which has been perplexing the accelerator industry, and the products such as environment-friendly homogenizer, continuous method, high heat stability and high dispersion insoluble sulfur, PK900 and TBSI have been successfully localized, breaking the foreign technological monopoly. The company's Derek rubber auxiliary construction project, large health series product project and pilot workshop project have been basically completed and need to be put into production urgently. The project with an annual output of 90,000 tons of rubber auxiliaries, 10,000 tons / year rubber anti-coke agent CTP production equipment, 6000 tons / year accelerator DZ production equipment, and intelligent factory management and control platform are 39%, 31%, 42% and 59% respectively, and the construction is on schedule.
The company issues convertible bonds for annual output of 65000 tons of high-performance rubber auxiliaries and by-product resource projects. The company plans to issue convertible bonds to raise a total of RMB 650 million yuan. The construction period of the project is 24 months, with a total investment of 730 million yuan. It is expected to be put into production in the second half of 2025. After completion, the production capacity of 55000 tons / year silane coupling agent and 10000 tons / year by-products will be formed. It is expected to achieve an average annual sales income of 813 million yuan and a net profit of 107 million yuan.
Profit forecast and investment evaluation. As the fall in product prices dragged down the gross profit margin, we lowered our valuation. We estimate that the return net profit of Yanggu Huatai from 2023 to 2025 is 4.99,6.66 and 746 million yuan, and the corresponding EPS is 1.23,1.64 and 1.84 yuan respectively (the previous EPS forecast for 2023-24 is 1.58,1.85 yuan).
Taken together, we give Yanggu Huatai a valuation of 14 times PE in 2023, corresponding to the target price of 17.22 yuan (originally 20.54 yuan, based on 13 times PE,-16% in 2023), maintaining a "better than the market" rating.
Risk hint.
Investment in construction capacity is lower than expected; macroeconomic decline; market prices of raw materials fall.