Event: The company released its three-quarter report for 2023. During the reporting period, it achieved operating income of 19.89 billion yuan, a year-on-year increase of 8.8%, net profit of 2.19 billion yuan, a year-on-year decrease of 52.0%, and non-net profit of 1.94 billion yuan, a year-on-year decrease of 57.4%; of these, the third quarter achieved quarterly operating income of 7.95 billion yuan, a year-on-year increase of 50.7%, a year-on-year increase of 28.0%, and net profit of 400 million yuan, a year-on-year decrease of 48.5%.
Prices of industrial silicon and silicone fell sharply, and business performance in the first three quarters was under pressure. Since 2023, the company's production and operation scale has further expanded, and the sales volume of industrial silicon and silicone products has increased year on year. However, due to changes in the economic situation, industry, and market supply and demand, product prices have declined significantly year on year.
In the first three quarters, the company's industrial silicon revenue was 10.36 billion yuan, up 33.2% year on year, sales volume 783,000 tons, up 75.0% year on year, average sales price 13,200 yuan/ton, down 23.9% year on year; 110 raw rubber revenue was 3.21 billion yuan, sales volume 247,000 tons, up 84.8% year on year, average sales price: 1.3 million yuan/ton, down 38.7% year on year; 107 glue revenue was 3.01 billion yuan, down 10.4% year on year, sales volume is 225,000 tons, up 49.6% year on year, average sales The price was 13,400 yuan/ton, a year-on-year decrease of 40.1%.
Prices of industrial silicon and silicone rose in the third quarter, and prices have rebounded recently. In the third quarter of 2023, the company's industrial silicon revenue was 4.27 billion yuan, up 31.5%, sales volume was 362,000 tons, up 50.3%, average sales price was 11,800 yuan/ton, down 12.5% month on month; 110 raw rubber revenue was 1.39 billion yuan, sales volume was 118,000 tons, up 63.4% month on month, average sales price was 11,700 yuan/ton, down 11.2% month on month; 107 glue revenue was 1.04 billion yuan, down 3.1% month on month, sales volume: 86,000 tons, up 6.1% month on month The average sales price was 12,100 yuan/ton, down 8.7% from the previous month. Prices of industrial silicon and silicone have rebounded sharply since August. Currently, the average price of the industrial silicon market is 15,200 yuan/ton, and the average price of the organic silicon DMC market is 14,800 yuan/ton, up 8.6% and 8.8% respectively from the 2023Q3 average price.
Continue to consolidate and enhance its position in the industry and actively deploy new silicon-based materials. As of the end of June 2023, the company's industrial silicon production capacity is 1.22 million tons/year and silicone monomer production capacity is 1.73 million tons/year. Among them, the Shanshan Phase III silicone project with an annual output of 200,000 tons was put into operation in the second quarter. The company actively promotes the “polycrystalline silicon-monocrystalline slice-battery module & photovoltaic glass-photovoltaic power generation” integrated industrial park (including 200,000 tons of high-purity polysilicon projects with an annual output of 200,000 tons, which is expected to be put into operation in the third quarter of 2023; the 20GW photovoltaic module project, which is expected to be put into operation in the fourth quarter of 2023; the ultra-thin high-transmittance glass manufacturing project for new energy equipment with an annual output of 1.5 million tons, is expected to be put into operation in the third quarter of 2023), and Shanshan Eastern Hesheng Company's annual production of 200,000 tons of high-purity silicon project, which is expected to be put into operation in 2024 Production began one after another in the first quarter of the year. Yunnan Hesheng Hydropower Silicon Circular Economy Project - 800,000 tons/year of industrial silicon production and supporting 600,000 tons of briquettes processing and production (phase I), construction is expected to be completed in 2024. The company has fully mastered the core process technology of the entire silicon carbide materials industry chain and broken through the technical barriers of key materials and equipment. Currently, the silicon carbide production line has mass production capacity, product yield is at the leading level of domestic enterprises, and has caught up with the level of leading international enterprises in terms of key technical indicators. The 6-inch substrate and epitaxial film have been verified by many domestic downstream device customers, and successfully developed customers in Japan, South Korea, Europe, and the US; the 8-inch substrate was developed smoothly, and samples were produced.
Maintain an investment rating of “excess holdings”. Due to the sluggish performance of the industrial silicon and silicone markets, we have adjusted our profit forecasts. We expect net profit from 2023-2025 to be 3,098 billion, 4.561 billion, and 6.384 billion yuan, respectively, and EPS of 2.62, 3.86, and 5.40 yuan respectively. The current stock price corresponding to PE is 21, 15, and 10 times, respectively, maintaining the “increased holding” investment rating.
Risk warning: Product prices are falling, raw material costs are rising, and the commissioning of new projects falls short of expectations.