Main points of investment:
Event: the company released its third quarterly report for 2023, and its performance was slightly lower than expected. According to the company announcement, the company's revenue in the first three quarters was 7.49 billion yuan, yoy + 21.00%; return net profit 658 million yuan, yoy + 9.13%; deduction of non-return net profit 574 million yuan, yoy + 4.42%. In the third quarter, the company achieved revenue of 3.022 billion yuan, yoy + 37.78%, net profit of 164 million yuan, yoy + 3.40%, non-return net profit of 143 million yuan, yoy + 6.41%. The performance was slightly lower than expected.
Jiangxi Xinke and Jinchang Company have improved their performance in operation, and the strength of the resource plate has been further enhanced. According to the company announcement, the improvement in the company's performance in the third quarter is mainly due to the commissioning and operation of Jiangxi Xinke and Jinchang Company, in which Jiangxi Xinke is the company's first large-scale and complete industrial chain project. the electrolytic copper production line was put into production in March this year, the precious metal production line was put into production in May, and all the product lines were opened in June, realizing the sales of electrolytic copper, gold, silver and so on. In the future, with the further straightening out of project production, it is expected to further contribute to profits.
The cash flow of operating activities is affected by the purchase of raw materials and is expected to improve with the sale of products. According to the company announcement, the net cash flow generated by the company's operating activities in the first three quarters was-1.198 billion yuan, down 283.02% from the same period last year, mainly to pay for the purchase of raw materials to ensure the normal production and operation of Jiangxi Xinke and Jinchang high energy. some products have been sold back after the project has been put into operation, but most of the raw materials have not yet been processed and sold. With product sales in the future, the company's cash flow is expected to improve.
Launch an incentive scheme to enhance the enthusiasm of the core staff. On August 7, the company announced a restricted stock and stock option incentive plan (revised draft), which intends to grant a total of 26.9 million shares to middle and senior managers, core technical / business / production personnel, key employees, etc. (accounting for 1.76% of the total share capital, of which restricted shares account for 0.88%, the grant price is 4.62 yuan per share; stock options account for 0.88 percent, the exercise price is 9.28 yuan per share) The performance appraisal target is 2023-26 net profit, compared with 2022, the growth rate is no less than 30%, 50%, 80%, 100%.
140 million yuan to acquire a 51% stake in Zhongxin Hongwei, horizontally expand the field of recycled plastics such as PA and PET. On October 30, the company announced that it planned to acquire a 51% stake in Zhongxin Hongwei with 140 million yuan, and horizontally expand the resource comprehensive utilization and recycling business of PA, PET and other recycled plastic subcategories. According to the announcement, from January to May 2023, Zhongxin Hongwei realized operating income of 124 million yuan and net profit of 7.3951 million yuan. The target company promises that the performance targets for 2023-2026 are 208.3 × N (N is the remaining months of 2023), 25 million yuan, 35 million yuan and 45 million yuan respectively.
Investment analysis opinion: considering that Jiangxi Xinke, the company's key resource utilization project, has just been put into production this year and is still in the production capacity climbing stage, while the fierce competition in the industry has led to a reduction in gross profit, we have lowered the company's 23-25 return net profit to 9.52 shock 11.88 / 1.466 billion yuan (previous value: 11.70 shock 14151,760 million yuan), and the current stock price corresponds to 23-25 PE of 13-10-8 times. Taking into account the company's hazardous waste resources capacity improvement and industrial chain extension will enhance its profitability, future performance growth is still guaranteed, maintain the "buy" rating.
Risk tips: the production capacity of resource-based business is not as expected; the market competition is intensified; the risk of price fluctuation of raw materials and products.