Main points of investment:
Company announcement: the company released the third quarterly report of 2023, the company realized operating income of 2.576 billion yuan (YoY-5.10%), net profit of 141 million yuan (YoY-39.93%), deducting 130 million yuan (YoY-38.84%) of non-return net profit. Among them, 2023Q3 realized operating income of 916 million yuan (YoY-5.15%,QoQ-7.97%), net profit of 44 million yuan (YoY-37.70%,QoQ-21.39%) and non-return net profit of 41 million yuan (YoY-26.49%,QoQ-17.58%). The performance was lower than expected.
The decline in sales of the main products is a drag on short-term performance, and the bottom is waiting for demand to repair. According to the company's announcement, in the first three quarters of 2023, the total output of additives was 954300 tons (YoY-11.83 10,000 tons), and the total sales volume was 947300 tons (YoY- 99400 tons), of which 2023Q3 total production was 331800 tons (YoY-6.16 10,000 tons, QoQ-5.13 10,000 tons), and total sales volume was 3288 million tons (YoY-4.58 10,000 tons, QoQ-5.84 10,000 tons).
In terms of segment, the sales of 2023Q3 high performance superplasticizer, superplasticizer and functional materials were 24.31,1.28 and 72900 tons respectively, which were-20.66%, + 24.27% and + 3.40% respectively compared with the same period last year, and the month-on-month sales were-18.01%,-14.09% and + 15.35% respectively. The sales prices of high-performance superplasticizer, superplasticizer and functional materials are 2087 yuan / ton, 2051 yuan and 1887 yuan / ton respectively, which are-0.61%, + 20.06% and + 6.66% respectively over the same period last year. The prices of major raw materials have fallen, and the pressure on the cost side has eased. In the first three quarters of 2023, the average purchase prices of ethylene oxide and formaldehyde fell by 15.73% and 18.84% respectively compared with the same period last year. 2023Q3's gross profit margin is 33.06%, year-on-year + 2.40pct, month-on-month-2.78pct, net sales margin 7.05%, year-on-year-1.83pct, month-on-month-0.61pct.
We will steadily expand and improve the national production base and strengthen the development of the field of capital construction projects. According to the company announcement, in the first half of 2023, the company officially put into production at the South China production base in Jiangmen, Guangdong Province, providing a strong support for the company to better serve customers in the "Great Bay area" and open up the South China market. In July 2023, the new material production line of Guangxi Subot project with an annual output of 400000 tons jointly invested by the company and Guangxi Luqiao was officially put into production, which will further strengthen the supply coverage to the surrounding provinces and cities. the products will be widely used in highway, railway, hydropower and other national key projects and municipal civil projects in the southwest region. At present, the national production capacity layout has been basically improved, laying a good foundation for the company to deeply cultivate the regional market and enhance the national market share. at the same time, the company will further supplement and expand the compound base around the regional base and expand market coverage. Improve timely response and delivery capabilities. In terms of main business, the company continues to strengthen its business development in the field of infrastructure engineering. It has participated in the construction of a number of national and local key projects, such as the second Cross Harbour Tunnel in Jiaozhou Bay, Ye Batan Hydropower Station, Lufeng Nuclear Power Plant, Xiamen New Convention and Exhibition Center, Pinglu Canal Hub, etc. At the same time, it has increased investment in the energy field, and won a large number of energy projects, including Sanao Nuclear Power, Lufeng Nuclear Power, Huizhou Offshore Wind Power, Zhangpu Offshore Wind Power, Mar Block Hydropower, Hunyuan pumped Storage and a number of major projects, including nuclear power, hydropower, wind power, energy storage and other industries. The company's overseas business has maintained a trend of rapid development, and has achieved significant growth in many "Belt and Road Initiative" countries and regions. At the same time, the product categories sold in overseas regions have also been continuously enriched.
Investment analysis opinion: considering that the demand repair of the main products is slow, the sales volume of high performance superplasticizer is reduced by 8%, the sales of functional materials is reduced by 11%, and the net profit of homing in 2023-2025 is reduced to 2.0,4.4 and 530 million yuan respectively (the previous value is 3.0,4.7,560 million yuan). The current market capitalization corresponds to 24,11,9 times of PE respectively. The company is a benchmark enterprise in the superplasticizer industry and steadily expands its layout nationwide. And continue to add functional new materials, create new profit growth points, medium-and long-term growth can be expected, maintain the "overweight" rating.
Risk tips: prices of major raw materials have risen sharply, new projects have been put into production less than expected, and downstream demand has fallen sharply.