Event description
The company released its three-quarter report in 2023, with revenue of 2.15 billion yuan (year-on-year + 5.4%) in the first three quarters, net profit of 450 million yuan (+ 24.0%) and non-net profit of 430 million yuan (+ 31.7%). Among them, Q3 achieved revenue of 810 million yuan (year-on-year-20.2%, month-on-quarter + 14.0%), net profit of 200 million yuan (year-on-year-7.6%, month-on-month + 31.2%), and non-net profit of 190 million yuan (year-on-year-8.8%, month-on-month + 35.5%). Q3's revenue and performance continue to improve.
Event comment
The company continues to transform to the compound agent, and its production capacity continues to climb. In the first three quarters, the company's revenue increased by 5.4% compared with the same period last year, mainly due to the company's increased promotion of composite products, increased development and access to core customers, deployment of high-quality resources, active docking of customers, and breakthroughs in core customer admittance. Sales of composite agents are growing rapidly. The company's gross profit margin in the first three quarters was 34.5% (year-on-year + 6.4 pct), mainly due to lower costs due to lower raw material prices and an increased share of revenue from high-margin composite products. The company's expense rate for the first three quarters was 11.2% (year-on-year + 2.1 pct), with sales, management, finance and R & D expense rates changing-0.2,0.0, + 1.7 and + 0.6 pct, respectively. The increase in the company's financial expense rate in the first three quarters is mainly due to a decrease in exchange earnings and interest income as a result of exchange rate changes.
The production capacity is growing rapidly and is constantly transforming to the compound agent. In terms of production capacity, as of 2023H1, the company has more than 200000 tons of lubricating oil additive single agent design annual production capacity. In addition, as of 2023H1, the project progress of the company's annual output of 150000 tons of lubricating oil additive products has reached 43.6%. The first phase of the project has been put into production and use in the third quarter of 2022, partly meeting the company's capacity needs; the investment progress of the Lubricating Oil Additives Research Center built with 140 million has now reached 10.0%. With the continuous promotion of the company's production capacity and the continuous enhancement of R & D strength, and the continuous transformation to high-end composite products, revenue and performance are expected to continue to usher in greater growth.
The quality of single-dose products is stable, and compound agent products continue to pass authoritative certification. The company's single-dose products have stable quality, high performance and price, and have great demand potential in foreign markets. at the same time, they have also gained high industry popularity and reputation in the domestic market. The complete range of single agent is the basis and prerequisite for compound agent formulation research and development and compound agent API certification, and it is also a solid foundation for the transformation from single agent to compound agent and entering the mainstream market. In terms of compound agents, the company has independently mastered the formulation process of CD grade, CF-4 grade, CH-4 grade, CI-4 grade and CK-4 grade diesel engine oil. The formulation process of SE, SF, SG, SJ, SL, SM, SN, SP gasoline engine oil compound agent and natural gas engine oil compound agent, motorcycle oil compound agent, marine system oil compound agent, marine cylinder oil compound agent, anti-wear hydraulic oil compound agent, gear oil compound agent, among which CI-4, SN, SP grade compound agent has passed the foreign authoritative third-party bench test. As of 2023H1, the company's compound agent revenue accounted for 64.8%, the transformation and upgrading has been fruitful.
Maintain a "buy" rating. The company is the leading domestic supplier of lubricating oil additives and the world's leading supplier of carbonless paper chromogenic agents, with a complete range of single-agent types and R & D production capacity of key raw materials. In 2013, it began to enter the lower reaches of the compound agent business with higher added value, the product technology is leading in the country, and the compound agent has continuously passed the foreign authoritative third-party bench test. With the continuous release of production capacity, the company is expected to usher in rapid development. It is estimated that the company's net profit from 2023 to 2025 will be 690 million yuan, 950 million yuan and 1.26 billion yuan respectively.
Risk hint
1. The price of upstream raw materials is rising.
2. The downstream demand is lower than expected, and the production of the new project is not as expected.