The net profit of homecoming in the first three quarters of 23 was-66% compared with the same period last year. Q3 was-38% compared with the same period last year, maintaining the "overweight" rating.

Chenghua shares released three quarterly reports on October 12, showing revenue of 720 million yuan in the first three quarters, net profit of 40 million yuan (deducting 20 million yuan after deducting non-yoy-80.2%) and yoy-66.4% (deducting non-yoy-80.2%); Q3 realized revenue of 250 million yuan, with a month-on-month ratio of + 3.3% impulse 11.4%, a net profit of 20 million yuan, and a net profit of-37.8% and 111.1% compared with the previous quarter. We estimate that the 23-25 year net profit of the company is 0.65 EPS 1.07 billion, corresponding to the corresponding 40xPE 0.70 yuan. Combined with the average 40xPE valuation of the comparable company's 23-year Wind consensus expectation, considering that the demand for polyetheramine is expected to pick up from the bottom, the company will be given a 23-year 41xPE with a target price of 12.71 yuan, maintaining the "overweight" rating.

The price and spread of polyetheramine narrowed, and the gross profit margin decreased in the first three quarters compared with the same period last year.

The price of polyetheramine remained low in the third quarter of 2023, according to Baichuan Yingfu, 23Q3 East China market D230 average price of-7% to 18.6 million yuan / ton, raw material propylene oxide East China market average price of-3% to 9500 yuan / ton, the price gap continued to narrow. The demand for flame retardants and silicone rubber industry is also weak, which has an impact on the performance. The company's gross profit margin in the first three quarters was year-on-year-9.4pct to 16.4%, gross margin in the third quarter from + 2.1pct to 17.1%, and sales / management / R & D / financial expense rates in the first three quarters were year-on-year-0.0/+1.3/-0.5/+0.1pct to 2.7%, respectively.

The boom of polyetheramine is expected to improve, and new investment projects are expected to gradually contribute to the increase.

According to Baichuan Yingfu, the price of polyetheramine D230 in eastern China on October 12 was 185,000 yuan / ton, up 3% from the September low, and the price difference of polyetheramine-propylene oxide-propanediol was up 0.100 yuan / ton from the September low to 1.04 million yuan / ton. although the price difference of polyetheramine is still at its low since 2020, it has improved. It is expected that the boom of polyetheramine products is expected to improve as demand in the wind power sector picks up. According to the third quarterly report, the company plans to increase 200 million yuan to the wholly-owned subsidiary Huaian Chenghua "annual production of 40,000 tons of polyetheramine (42000 tons of polyether)" and the construction of the subsidiary Huaian Chenghua won the land use right for polyetheramine with RMB 20 million yuan. It is expected that the company will contribute to the increment in the future.

Risk hint: the risk of a continuous downturn in downstream demand and the risk that the progress of the new project falls short of the expected risk.