Event: the company released its Triple report for 2023. In the first three quarters of 2023, the company achieved operating income of 2.989 billion yuan, down 31.66% from the same period last year, and realized net profit of-194 million yuan, down 202 million yuan from the same period last year. In the third quarter of 2023, the company realized operating income of 949 million yuan, down 34.8% from the same period last year and 13.9% from the previous year; realized net profit of-44 million yuan, down 4.6 million yuan from the same period last year, an increase of 46 million yuan; and realized deduction of non-homed net profit of-46 million yuan, down 4.4 million yuan from the same period last year and an increase of 0.46 million yuan from the previous year.

Demand has picked up and 23Q3's performance has improved month-on-month. The company's performance declined in the first three quarters of 23 compared with the same period last year. On the one hand, due to the lack of downstream demand, the sales income of the company's leading product polycarboxylic acid superplasticizer polyether monomer declined. In the future, with the improvement of the domestic real estate market and the steady growth of infrastructure investment, the superplasticizer polyether monomer industry will gradually pick up. On the other hand, due to the impact of the decline in the unit price of products intensified by industry competition, the revenue of the company's new energy material carbonate products has declined. It is expected that with the adjustment of supply and demand in the market, carbonate products will return to the profit range. 23Q3, due to the pick-up in downstream demand, the company's performance has improved compared with the previous year. In terms of gross profit margin, in the first three quarters of 23 years, the company's sales gross profit margin was-0.45%, a year-on-year decline of 5.3pct, a serious decline in gross profit margin, mainly due to the decline in sales revenue of the main products. In terms of expense rate, Q3 in 23, the company's sales, management and financial expense rates were 0.5%, 3.9% and 1.1% respectively, with an increase of 0.1,1.0 and 0.7pct respectively compared with the previous year.

Focus on the epoxy industry chain, continue to move forward to the new energy and new materials market, the construction of new capacity is smooth. The company is the most complete, largest and most widely distributed manufacturer of green low-carbon fine chemical materials derived from ethylene oxide in China, and is one of the largest suppliers of green low-carbon fine chemical materials derived from ethylene oxide in the world.

The company has 50, 000 cubic meters of low-temperature ethylene storage tanks, 300000 tons of commercial ethylene oxide, 1.6 million tons of ethoxylation capacity. In terms of production capacity, the company focuses on the epoxy industry chain and continues to move forward to the new energy and medical materials market. According to the company's semi-annual report in 2023, the existing production capacity projects under construction include the second phase 150,000 tons / year ethylene oxide (propylene oxide) intensive processing derived new materials expansion project, 200,000 tons / year epoxy derived green energy new materials project, 150000 tons EO/PO deep processing equipment technical renovation project, annual production capacity of 2800 tons of food and pharmaceutical grade polysorbate (80) project, as of the first half of 2023. The progress of the four projects is 20.22%, 41.78%, 35.79% and 100%, respectively. With the subsequent production of new capacity, it is expected to boost the company's performance to a certain extent.

Earnings forecast, valuation and rating: due to the decline in sales revenue of polycarboxylic acid superplasticizer polyether monomer and new energy material carbonate products, the company's performance declined in the first three quarters of 23 years compared with the same period last year, but 23Q3 performance improved due to a pick-up in downstream demand. As the price of the main product is still low and the recovery of downstream demand is limited, we downgrade the company's profit forecast for 23-25 years. It is estimated that the company's homing net profit for 23-25 years is-2.04 (down 305 million yuan) / 0.13 (down 93.1%) / 0.36 (down 85.2%) respectively. We are still optimistic about the layout of the company in the ethylene oxide industry chain, the overall growth space is broad, and maintain the company's "buy" rating.

Risk tips: raw material price fluctuation risk, lower-than-expected demand, capacity construction risk.