Main points of investment:
The company released its third quarterly report for 2023, with results slightly lower than expected. During the reporting period, the company realized revenue of 1.025 billion yuan (YoY-15%), net profit of 200 million yuan (YoY-38%) and net profit of 177 million yuan (YoY-42%). Among them, the company realized revenue of 328 million yuan (YoY-14%, QoQ-5%), net profit of 58 million yuan (YoY-49%, QoQ-20%), net profit of 51 million yuan deducted from non-parent (YoY-52%, QoQ-22%), and the performance of the single quarter was slightly lower than expected. 23Q3 Company's comprehensive gross profit margin was 27.88%, with month-on-month changes of-9.92pct and +1.00pct respectively, and net profit margin was 17.63%, with month-on-month changes of-11.90pct and-3.10pct respectively. In terms of expenses, the sales, management and R & D expenses of 23Q3 were basically stable. Affected by exchange rate fluctuation, the financial expenses of 23Q3 increased by nearly RMB 14 million compared with Q2, resulting in a month-on-month decline in performance.
23Q3 Maleic anhydride derivatives sales and prices remained stable, exchange rate fluctuations led to month-on-month pressure on performance. Since 2023, the Company has actively responded to changes in the operating environment, deepened the layout of the supply chain, released the production capacity of new devices, increased the sales volume of maleic anhydride derivatives year-on-year, and maintained stable sales volume in 23Q3 compared with Q2. In terms of price, according to Baichuan information data, the price of methyl tetrahydrophthalic anhydride is basically maintained at 14,000 yuan/ton, while the quarterly average price of upstream raw material maleic anhydride is 6841 yuan/ton, which is basically stable compared with the previous month and stable in quarterly price difference. However, due to the fluctuation of RMB exchange rate, there was a small loss in exchange rate in 23Q3, but the exchange rate in 23Q2 brought positive income, resulting in a month-on-month decline in performance. Subsequently, we believe that the future demand for maleic anhydride derivatives is highly deterministic, especially in electrical insulation and composite materials. The company is a leading enterprise in maleic anhydride derivatives in China, with large scale and complete varieties. At present, it has a production capacity of 71,000 tons. As for Gulei Base, due to the influence of external macro environment, changes in internal environment of the industry and extreme weather, the implementation progress has been delayed and the construction progress has been extended compared with the original plan.
The downstream demand for Q3 functional intermediates is still weak, and with the recovery of electronic terminal consumption, the company's business is expected to accelerate its volume. Since 2023, the demand for electronic terminal products has remained weak, and the recovery rate of panel industry has been slow, resulting in the business growth rate of the Company falling short of expectations. In the follow-up, Huawei officially announced the launch of a new generation of Mate 60 Pro on August 29, and launched new products such as Mate 60 Pro+ and Mate X5 folding machine for the sixth time. Superimposed Glory, OPPO and other brands also released new models for the sixth time, driving the recovery of demand end. We expect that the intermediate business of 23Q4 company is expected to accelerate.
Investment analysis opinion: 23Q3 performance slightly lower than expected, Gulei base project delayed, downgraded the company's 2023-2025 net profit forecast to 272 million yuan, 342 million yuan, 445 million yuan (original value of 308 million yuan, 395 million yuan, 506 million yuan), the current market value corresponding to PE 18, 15, 11X respectively, according to Wind consistent expectations, comparable company Ruilian Xincai 2023 PE 20X, maintain "overweight" rating.
Risk tips: 1) downstream demand is lower than expected; 2) the progress of new projects is not as expected; 3) raw material prices fluctuate greatly.