Event description

The company released a report for the third quarter of 2023 that the cumulative operating income in the first three quarters of 2023 was 414 million yuan, down 28.39% from the same period last year; the net profit returned to the mother was 21 million yuan, down 79.48% from the same period last year; and the net cash flow from operating activities was 55 million yuan, down 60.62% from the same period last year. Of this total, the operating income in the third quarter of 2023 was 134 million yuan, down 20.07 percent from the same period last year, and the net profit was 5 million yuan, an increase of 82.36 percent over the same period last year.

Event comment

The company focuses on the R & D and production of new materials. The company's main business is polyetheramine, optical grade polymer materials, high light transmittance materials, mainly used in wind power blades, shale gas mining, automotive coatings, optical lenses and other fields, in which the output of polyetheramine ranks in the forefront of the industry. The company has been focusing on R & D and production of all kinds of new chemical materials, through continuous independent innovation, with perfect chemical infrastructure, self-developed patented technology and rich production process control experience, it has become a leading scientific and technological enterprise in the large-scale production of polyetheramine, (methyl) isoborneol methacrylate and alicyclic acrylate. In addition, the company actively layout, research and development of cycloolefin copolymers (COC/COP), is expected to fill the domestic market gap in the field of high light transmittance materials.

2023Q3's sales of aliphatic amines and optical materials increased, prices decreased, and performance was under pressure. The output of 2023Q3's main products aliphatic amines and optical materials was 4865 tons and 1145 tons respectively, down 14.1% and 18.5% from the previous month, while sales were 5404 tons and 1429 tons respectively, up 9.2% and 16.7% from the previous month, with a significant increase, but the average selling price of aliphatic amines and optical materials was 16670 yuan / ton and 30782 yuan / ton respectively, down 6.1% and 21.1% from the previous month, mainly due to the impact of a relatively depressed market.

COC/COP is a highly transparent material with superior optical properties and high technical barriers to its preparation, so its domestic production is in a blank. Due to the special result of COC/COP, there are high technical barriers in monomer, catalyst and polymerization technology. International leading enterprises such as Ruiweng, Baoli Plastics and Mitsui Chemical have formed a complete industrial chain from cycloolefin monomer to polymer synthesis, occupying most of the production capacity. At present, the industrial production of COC/COP industry in China has been in a blank state for a long time, all relying on imports, and the future market space is broad. The company has the highest design capacity, takes the lead in completing laboratory-level synthesis and verification, and all indicators meet expectations, and is expected to become the first listed company to mass-produce COC/COP in China. Take the main counterbid varieties of the company's COC as an example, the price of Japanese manufacturers is basically between 120,000 yuan / ton and 160,000 yuan / ton, while the company expects the market sales price to be about 80,000 yuan / ton, which is more competitive compared with the pricing of Japanese manufacturers. The relatively low price is conducive to change the high price of COC/COP products, and can greatly expand the downstream application fields of products. Localization is expected to open more new demand space and enhance the consumer demand of COC/COP. In addition, after the project is put into production, the price of the company's products is lower than the price of the existing products, which can help the company's products to quickly form domestic substitution and increase the company's product market share.

As a national high-tech enterprise deeply ploughing new materials, without considering the future changes in equity and taking into account the contribution of polyetheramine and COC/COP project capacity, the company is expected to make a net profit of 27 million yuan, 141 million yuan and 412 million yuan from 2023 to 2025, corresponding to the closing price PE of 148.2X, 28.7X and 9.8X on October 27, 2023, maintaining the "buy" rating.

Risk hint

1, the production capacity of polyetheramine has increased significantly, and the demand is lower than expected; 2, the progress of the new project is not as expected; 3, the risk of downward price after the production capacity of the optical material fund-raising project is put into production.