Jianghan Xincai released its three-quarter report in 2023, the company achieved revenue of 1.751 billion yuan in the first three quarters, down 34.22% from the same period last year, and its mother's net profit was 535 million yuan, down 35.65% from the same period last year. Among them, Q3 achieved revenue of 574 million yuan, down 29.40% from the same period last year, 3.76% from the previous month, and the net profit from its parent was 160 million yuan, down 35.38% from the same period last year and 27.41% from the previous year. The company's new silane production capacity was released smoothly in the third quarter, and its production and sales volume increased significantly. Operating performance shows strong resilience at the bottom of the industry (the combined impact of Q3 sales and financial expenses is about 52 million yuan), and the performance is in line with expectations.

The silane boom bottomed out and rebounded in the third quarter, and the bottom of the industry was confirmed. Under the influence of international monetary tightening, geopolitics and other factors, the global economic downturn and the release of new production capacity in the supply-side industry have led to a gradual decline in the silane boom since the second half of 2022. The current silane price has fallen back to the historical bottom. Since mid-August, due to the strength of upstream raw material silicon powder and the pick-up of terminal demand, the main silane boom has hit bottom and rebounded, according to Baichuan Yingfu data, as of September 2023. The average prices of aminosilane, epoxy silane, methacryloxysilane and sulfur silane are 28 yuan / kg, 40 yuan / kg, 25.5 yuan / kg and 19 yuan / kg respectively (including tax). Compared with the low of the year, they rebounded by 12%, 38%, 4%, 15%, respectively, and the domestic silane market is booming for repair. From the perspective of overseas markets, silicone exports turned positive in August compared with the same period last year, reversing the decline of the export market in the past year, and silane market demand is expected to gradually come out of the haze.

The release of new production capacity is smooth, and the long-term growth is expected. The company's sales end firmly domestic and international double cycle, Q3 production and sales volume to achieve substantial growth, according to the company's announced operating data. In the third quarter, the production and sales of functional silane reached 28514 and 29004 tons respectively, up 13.75% and 15.40% respectively from the previous quarter. The production capacity of the functional silane project raised by the company's IPO has been released smoothly, and the long-term planned production capacity will reach 182000 tons. In addition, the company actively promotes the pilot test of ultra-high purity synthetic quartz sand, forming a territory for the expansion of self-produced raw material silicon tetrachloride to medium and high-end materials and high-value fields.

Adjust the profit forecast and maintain the "buy" rating: the production capacity of the company's functional silane coupling agent and intermediate project was released smoothly, and the cost control level of the trichlorosilicon project was further improved after the trichlorosilicon project was put into production. However, considering the impact of the decline in silane prices, we adjust the profit forecast. The company's homing net profit from 2023 to 2025 is expected to be 7.40,9.57 and 1.311 billion yuan respectively, corresponding to 14x, 11x and 8X respectively. Maintain a "buy" rating.

Risk hint: the progress of the new project is not as expected; the risk of demand decline