Event: The company released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved revenue of 1,025 million yuan, a year-on-year decrease of 14.6%, and net profit of 200 million yuan, a year-on-year decrease of 37.7%. In 2023, Q3 achieved revenue of 328 million yuan, a year-on-year decrease of 13.8%, a decrease of 5.5%; realized net profit of 58 million yuan, a year-on-year decrease of 48.6%, a decrease of 19.6% over the previous year; and realized net profit after deduction of 51 million yuan, a decrease of 52.3% over the previous year and a decrease of 21.9% over the previous year.
The volume of maleic anhydride derivatives increased and decreased, and 23Q3's performance declined month-on-month. In 23Q3, the company deepened its supply chain layout and released production capacity. Sales of maleic anhydride derivatives increased by more than 25% year on year. Although the company's sales volume increased significantly, due to the price of raw materials, the company's product prices were lower than the same period last year, and 23Q3 performance declined month on month. In terms of gross margin, in 23Q3, the company's gross sales margin was 27.9%, down 1pct from the previous month.
In terms of cost rates, in the first three quarters of the year 23, the company's sales, management, and financial expense ratios were 0.6%, 2.7%, and -1.2%, respectively, up 0.1, 0.4, and 1.2 pct over the previous year.
The production capacity of maleic anhydride derivatives continues to expand, and in the future, three levels of business will be established and developed. The company is the supplier with the largest variety of maleic anhydride derivatives in the domestic market, with a total sales volume of 67,600 tons of maleic anhydride derivatives in 2022. The company currently has two production bases in Henan and Shandong. The Fujian production base is under construction. The region is rich in chemical technicians, the supply of raw materials in surrounding areas is fully guaranteed, and the advantages in manpower and raw material costs are outstanding. The company's production capacity will continue to be released as the expansion project with an annual output of 20,000 tons of methyltetrahydrophthalic anhydride was put into operation in 2022, and the completion of the intelligent transformation and upgrading project to optimize the product structure and Gulei related projects this year. In the future, the company will continue to focus on the R&D, manufacturing, and market operation of fine chemical materials. At the same time, establish and develop three business levels. The first level is the existing core acid anhydride business, the second level is the functional materials intermediate business, and the third level is developing new business and application fields based on this.
We have been deeply involved in the electronic chemicals industry for many years, and have significant resource advantages for international customers. The company has been involved in the electronic chemicals industry for a long time. After years of market expansion, the company has been highly recognized by domestic and foreign markets, and has accumulated high-quality and stable customer resources. The company's customers include Huntsman (Huntsman), Westlake Chemical Group (Westlake), OLED material vendors and many other internationally renowned customers.
Profit forecast, valuation and rating: The volume of maleic anhydride derivatives increased and decreased, and the 23Q3 company's performance declined month-on-month. Since there is still no significant improvement in the price of maleic anhydride derivatives, and downstream demand is weak, we have lowered the company's profit forecast for 2023-2025. The company's net profit from 2023-2025 is estimated to be 2.73 (down 45.9%) /3.40 (down 47.7%) /4.14 (down 46.5%) yuan respectively, maintaining the “buy” rating.
Risk warning: Product and raw material prices fluctuate, downstream demand falls short of expectations, and capacity building risks.