Event: according to the company's quarterly report for the first three quarters of 2023, the revenue in the first three quarters of 2023 was 585 million yuan, an increase of 18.64% over the same period last year. The net profit was 168 million yuan, up 16.94% over the same period last year. The net profit after deducting non-return was 161 million yuan, an increase of 23.17% over the same period last year. Among them, the revenue in the third quarter was 215 million yuan, an increase of 32.44% over the same period last year, and the net profit was 58.86 million yuan, an increase of 30.83%. After deducting the non-return net profit of 58.09 million yuan, an increase of 29.08% over the same period last year and 8.79% month-on-month growth, the single-quarter profit reached a record high, and the company will maintain sustainable development. In addition, the company announced that it intends to use its own funds to buy back shares at an appropriate time in the future for equity incentives or employee stock ownership plans, and the repurchase price is tentatively set at no more than 46.50 yuan per share (inclusive). The total repurchase capital shall not be less than 50 million yuan (inclusive) and not more than 100 million yuan (inclusive).

The company released a buyback plan, and its quarterly profit hit an all-time high. The company announced that it intends to use its own funds to buy back shares at an appropriate time in the future for equity incentives or employee stock ownership plans, and the repurchase price is tentatively set at no more than 46.50 yuan per share (inclusive). The total repurchase capital shall not be less than 50 million yuan (inclusive) and not more than 100 million yuan (inclusive). According to the lower limit of the repurchase amount of 50 million yuan and the repurchase price of 37.00 yuan per share, the number of repurchased shares is about 1.35 million shares, and the proportion of repurchased shares accounts for about 1.00% of the total share capital of the company; according to the upper limit of the repurchase amount of RMB 100 million yuan, the repurchase price is 37.00 yuan per share, the number of repurchased shares is about 2.7 million shares, and the proportion of repurchased shares accounts for about 2.00% of the total share capital of the company. The management of the company has sufficient confidence in the future development of the company and highly recognizes the value of the company. With the rapid increase in market demand for more environmentally friendly and safer products and the continuous expansion of downstream application demand, the development momentum of China's synthetic hydrotalcite market is becoming stronger and stronger, and the prosperity of the company's industry will continue to improve.

The acquisition of Keao Chemical will enrich the layout of the company's products and enhance the company's comprehensive competitiveness. The company acquired 100% equity interests in Tangshan Keao Chemical and Tianjin Cindafone in cash, and increased its capital by 50 million to Keao Chemical.

Among them, the price of Keao chemical transaction is 88.3 million yuan, and that of Xindafeng is 19.7 million yuan. Keao Chemical mainly produces and sells high-end special antioxidants, as well as processing businesses such as compounding and granulation related to antioxidants. The main products are intermediate 3d5 methyl ester, series of antioxidants, rubber and plastic auxiliaries, compound antioxidants and other compound products. In 2021, Keao Chemical realized a net profit of 32.01 million yuan. Cindafone is mainly engaged in the domestic sales and export of antioxidants, ultraviolet absorbers and light stabilizers, and mainly purchases and sells Keao chemical products. Xindafeng has been deeply cultivated in the chemical sales field for many years, has formed a good reputation and reputation in the antioxidant industry, and has accumulated and served a number of long-term and stable customer resources. In 2021, Xindafeng made a net profit of 3.74 million yuan. We believe that the acquisition of high-end special antioxidants at a very low price enriches the range of the company's products, helps to further expand and optimize the company's business layout of polymer auxiliaries, and realizes the coordinated development of multi-business.

The company relies on its product advantages, import substitution is smooth. Due to the good competition pattern and the continuous optimization of product structure, the company's roe continues to maintain a high level. We expect a month-on-month increase in results in the fourth quarter of 2023. The main competitor of nucleating agent is American American Merken Company, and there are two domestic enterprises that have a big gap in all aspects and companies. Hydrotalcite's main competitor is Japan Concord, which is more than 90% dependent on imports. China is mainly focused on presenting and science and technology. on the one hand, the company carries out forward-looking research and development based on potential market demand, on the other hand, customized research and development is centered on customer demand. To meet the needs of customers while maintaining the company's forward-looking and advanced technology. At present, the company has more than 180 different types of nucleating agents, synthetic hydrotalcite and composite auxiliaries large-scale production capacity, with the ability to provide downstream high-quality customers with one-stop supply of raw materials. The company has outstanding R & D capability. The new product β nucleating agent and ternary hydrotalcite are innovative products with more outstanding performance and broad space in the future. In addition, there are many varieties in the research and development of new products. For example, new products such as hydrotalcite for agricultural film, hydrotalcite for wire and cable, acid absorbent for polypropylene film material have been completed and accepted, and the product occupies a leading position in China. The company is the first domestic company to pass the examination and approval of FDA food contact substances in the United States, and is currently the Chinese company with the largest number of such approval. The core products have obtained the technical access qualification of the global mainstream polypropylene process equipment Novolen and Unipol, which reflects that the technology and quality of the company's products have reached the international advanced level.

Maintain the "highly recommended" investment rating. We predict that the future revenue of the company from 2023 to 2025 will be 860 million yuan, 1.059 billion yuan and 1.302 billion yuan respectively, the net profit of returning mother will be 230 million yuan, 287 million yuan and 371 million yuan respectively, and the EPS will be 1.70,2.12yuan and 2.74yuan respectively. The current share price is 21.8x, 17.4x and 13.5x respectively corresponding to PE, maintaining the "highly recommended" investment rating.

Risk hint: the risk of lower-than-expected capacity construction and rising prices of raw materials.