Event: The company released its third quarterly report for 2023. During the reporting period, it realized operating income of 21.93 billion yuan, down 11.8% year-on-year, net profit attributable to parent company of 934 million yuan, down 81.0% year-on-year, and net profit deducted from non-profit of 879 million yuan, down 82.4% year-on-year. Among them, the operating income in the third quarter was 8.32 billion yuan, with a year-on-year growth of 10.1% and a month-on-month growth of 18.2%. The net profit attributable to the parent company was 325 million yuan, down 74.2% year-on-year and 104.4% month-on-month.
The prosperity of phosphorus chemical industry dropped sharply, and the performance of the first three quarters dropped significantly. During the reporting period, the market prices of some of the Company's main products decreased significantly year-on-year, profitability weakened, and sales volume decreased year-on-year. In the first three quarters, the sales volume of glyphosate series products, silicone series products, food additives and yellow phosphorus decreased year-on-year, while the sales volume of special chemicals, fertilizers, wet electronic chemicals and phosphate rock increased year-on-year; the sales price of phosphate rock increased year-on-year, while the prices of other products decreased year-on-year, among which the prices of glyphosate series products, silicone series products and special chemicals decreased significantly year-on-year. The company further consolidated the phosphorus, silicon and sulfur fine chemical industry chain and accelerated the transformation and upgrading to a technology-based green chemical new material enterprise.
In the third quarter, the prices of some products rose month-on-month, and the performance improved significantly month-on-month. In 2023Q3, the sales volume of glyphosate series products, silicone series products and wet electronic chemicals decreased month-on-month, while the sales volume of special chemicals, fertilizers, food additives, yellow phosphorus and phosphate rock increased month-on-month; at the price end, the average sales price of glyphosate series products, silicone series products, special chemicals, fertilizers and food additives decreased month-on-month, while the average sales price of yellow phosphorus, wet electronic chemicals and phosphate rock increased month-on-month. Since the fourth quarter, the average market price of glyphosate has dropped by 8.6% compared with 2023Q3, while the average market prices of yellow phosphorus, monoammonium phosphate, diammonium phosphate, phosphate rock and organic silicon DMC have increased by 4.3%, 11.2%, 5.2%, 7.2% and 6.9% respectively compared with 2023Q3.
Actively layout new energy and new material projects to open up room for future growth. The key projects of the company have been steadily promoted, among which Hubei Xingrui 550 tons/year silicone microcapsule pilot production line was completed in March this year and has achieved batch sales at present; Hubei Ruijia 200,000 tons/year RTV project (Phase I) entered the trial operation stage after completion in mid-July; the company's phosphide agent project completed 800 tons/year pilot test, and 5000 tons/year industrial device design is under way; The company's 5000 m3/year aerogel felt project, the holding subsidiary Hubei Xingyou 200,000 tons/year battery-grade iron phosphate project Phase I project, the joint-stock company Hubei Xingyou 300,000 tons/year lithium iron phosphate Phase I project, and the lithium phosphorus fluoride industry 100,000 tons/year battery-grade lithium dihydrogen phosphate project will be completed and put into operation for six consecutive years within the year. By the end of June 2023, the progress of Inner Mongolia Xingfa Organic Silicon New Material Integrated Cycle Project-Organic Silicon Device Project was 23%, and that of Hubei Xingrui 400,000 tons/year Organic Silicon New Material Project was 46%.
The layout of new materials and new energy industries of the Company has been gradually opened up, and the growth attributes have been continuously enhanced.
Maintain "overweight" investment rating. It is estimated that from 2023 to 2025, the net profit attributable to the parent company will be 1.37 billion yuan, 2.28 billion yuan and 3.21 billion yuan respectively, and the EPS will be 1.23 yuan, 2.05 yuan and 2.88 yuan respectively. The PE corresponding to the current stock price will be 16 times, 10 times and 7.0 times respectively, maintaining the investment rating of "overweight".
Risk tips: downstream demand is lower than expected, product prices fall, and new projects are not as expected.