The net profit after deducting non-2023Q3 was 169 million yuan, an increase of 340.42% over the same period last year. The company's 2023Q3 realized operating income of 2.399 billion yuan, an increase of 11.54% from the previous month and an increase of 84.37% over the same period last year; the net profit returned to its mother was 181 million yuan, down 1.97% from the previous month, an increase of 221.58% over the same period last year; and the net profit after deducting 169 million yuan, down 2.21% from the previous month, an increase of 340.42% over the same period last year. In the first three quarters, the company achieved operating income of 7.602 billion yuan, an increase of 10.49% over the same period last year, and a net profit of 580 million yuan, an increase of 35.77% over the same period last year. The net profit after deducting 550 million yuan was 41.24% higher than that of the same period last year. The increase in the company's profit was mainly due to the increase in sales volume, and the gross profit increased over the same period. The company's 2023Q3 sales gross margin of 19.54%, month-on-month growth of 0.21pct, year-on-year growth of 8.63pct, sales net profit of 8%, month-on-month decline of 0.3pct, year-on-year growth of 3.85pct.

The prices of monoammonium phosphate and compound fertilizer have stabilized and rebounded. According to Baichuan Yingfu, as of October 25, 2023, the average market price of 55% of monoammonium phosphate in the domestic powder market was 3112 yuan / ton, up 0.38% from the previous month, and 28.70% higher than that of 2418 yuan / ton on July 5, 2023. The average market price of chlorine-based compound fertilizer was 2557 yuan / ton, unchanged from July to month, up 12.15% from 2280 yuan / ton on July 7, 2023, while the average market price of sulfur-based compound fertilizer was 2872 yuan / ton, unchanged from July 12, up 10.46% from 2600 yuan / ton on July 12.

The new project is going well. 1) on the iron phosphate project, the company built a 40,000 ton / year iron phosphate plant in Songzi City through the holding subsidiary Songzi Stanley Yihua New Materials Plan in 2022, according to the company's research activities on August 18, 2023, one of the 50,000-ton devices in the project is expected to be put into production by the end of this year. 2) on the refined phosphoric acid project, the board of directors of the company examined and approved the "motion on the cooperation agreement and related party transaction of 100000 tons of refined phosphoric acid project signed between the holding subsidiary and Hubei Yihua Songzi Fertilizer Co., Ltd." in the first half of 2023. 3) on the compound fertilizer project, the company invested 640 million yuan in 2021 to build Lihe Fertilizer Industry annual output 1 million tons green high efficiency compound fertilizer project in Longhua County, Hebei Province. According to the company's 2023 semi-annual report, the 300,000 tons / year shotcrete sulfur-based compound fertilizer production line in the project has been put into use in the first half of 2023, other related supporting projects are under construction, and the project is expected to be put into production in 2023.

Profit forecast and rating. Due to the steady growth of the company's performance, we raised our profit forecast for the company. We estimate that the return net profit of the company in 2023-25 is 6.01 (+ 7.59%), 7.13 (+ 14.47%) and 827 (new) million yuan respectively, and the corresponding EPS is 0.52,0.62 and 0.71 yuan respectively. As the company is the leader in the domestic compound fertilizer industry, it is given a certain valuation premium; 15 times PE in 2023, corresponding to the target price of 7.81yuan (the previous target price is 7.81yuan, based on 18 times PE,-0.13% in 22 years); and maintain the "better than the market" rating.

Risk hints: the project construction schedule is not as expected, the prices of raw materials and products fluctuate greatly, the risk of safety and environmental protection, and the macroeconomic downturn.