Brief comment on performance
On October 27, 2023, the company disclosed that its operating income in the first three quarters of 2023 was 1.9 billion yuan, down 5.7% from the same period last year, and its net profit was 200 million yuan, down 18% from the same period last year. Among them, the operating income in the third quarter was 650 million yuan, an increase of 3.6% over the same period last year, an increase of 8.5% over the same period last year, and a net profit of 66.38 million yuan from the same period last year, an increase of 18.7% and 11.4%.
Business analysis
Product prices rebounded slightly, profitability upward repair. The downstream of the company's core product aliphatic amine is mainly the pesticide and pharmaceutical industry, and the unit price of the product is affected by the downstream demand and cost end, and the price of a series of organic solvents is also fluctuating downwards. in the first three quarters, the average sales prices of fatty amines, organic solvents, flavors and fragrances were 12281, 7799 and 34455 yuan / ton, respectively, with year-on-year changes of-11.4%,-4% and-2.5%, respectively. Judging from the quarterly data in the third quarter, the sales price of the product improved from the previous quarter to 12298 yuan / ton, down 2.4% from the same period last year and 6.5% from the previous year; the average sales price of organic solvents was 7830 yuan / ton, down 4% from the same period last year and 6.3% from the previous quarter; the average sales price of flavors and fragrances was 33156 yuan / ton, down 8% from the same period last year and 2.5% from the previous month Gross profit margin also improved from 22.7% in the second quarter to 26.2% in the third quarter.
Investment in the implementation of waste electrode and battery resources recycling project, lithium business layout continues to be optimized. In the past, the related business of the lithium electricity industry involved in the company is mainly extraction lithium extraction services, which has a certain degree of cooperation with lithium recovery in terms of process technology. In recent years, the overall recovery rate of lithium has been improved by constantly optimizing the extraction technology of lithium. Rely on technological advantages to quickly seize the first opportunity. In order to further promote the strategic development of the company and expand the fields of upstream and downstream industries, Zhejiang Xinyao Recycling Technology, a subsidiary of the company, plans to invest 600 million yuan in planning and construction of recycling projects for waste poles and battery resources, including production devices, auxiliary production devices and service facilities. The construction period of the first phase of the project is estimated to be 12 months, and the construction period of the second phase of the project is 40,000 tons of waste battery LFP black powder, with an estimated construction period of 18 months.
Earnings forecast, valuation and rating
The company is a leading domestic low-carbon aliphatic amine enterprise, and the flavor and flavor business is bound to overseas giants. Although the main business is under short-term pressure, the overall stability is relatively good, and the long-term growth of lithium recovery business plate is expected. We expect the company's 2023-2025 net profit to be 289 million yuan, 385 million yuan and 445 million yuan, respectively, and the current market value corresponding to the PE valuation is 19.3, 14.49, 12.53 times, maintaining the "buy" rating.
Risk hint
The release of new production capacity is lower than expected; the price of raw materials fluctuates sharply; the extraction order for lithium extraction is not as expected; the progress of lithium recycling project is not as expected; the RMB exchange rate fluctuates.