Event: The company released its report for the third quarter of 2023. In the first three quarters, the company achieved revenue of 878 million yuan, a year-on-year increase of 42.74%; net profit of the mother was 117 million yuan, a year-on-year decrease of 13.47%. In the third quarter, the company achieved revenue of 299 million yuan, up 34.29% year on year; net profit was 29 million yuan, down 35.49% year on year.

Comment:

The capacity is in the leading position in the country, and the scale of capacity continues to expand. According to the company's official website, the company and its subsidiaries currently operate 39 ships with a total capacity of 2894.81 million tons, ranking among the top liquid chemical and petroleum shipping companies in China. In addition, 2 ships are under construction, including a 3,700-ton chemical tanker and a 5,500-cubic liquefied petroleum gas tanker. By 2025, through new construction, procurement, and mergers and acquisitions, the company's fleet size will reach 50 ships.

Continue to promote the construction of a clean energy logistics supply chain. The company gave full play to its linkage and collaborative advantages with Andefu Energy's development, and the clean energy liquid ammonia road transportation and trade business maintained a stable and efficient development trend. Andefu Energy Supply Chain, a holding subsidiary, specializes in liquid ammonia road transportation services. Its business scope covers North China, East China, Central China, South China and Southwest China. It is in a leading position in the domestic hazardous chemical liquid ammonia segment. It achieved liquid ammonia traffic of 309,500 tons in the first half of 2023, and its service capacity and competitiveness level in the field of liquid ammonia road transportation business continued to improve.

In order to balance the comprehensive development of domestic and international hazardous chemicals markets, the company actively lays out and promotes international hazardous chemicals waterway transportation business. Since September 2022, the company has carried out international hazardous chemical shipping business by transferring its own domestic trade ships to foreign trade operations and purchasing foreign trade chemical ships. The routes are mainly distributed in Southeast Asia and Northeast Asia. At the end of the reporting period, the company had a total of 7 ships engaged in international hazardous chemical waterway transportation (2 were foreign trade chemical vessels and 5 were domestic and foreign trade vessels). In the first half of 2023, the total volume of foreign trade dangerous goods was 407,600 tons, and the company's competitiveness in the foreign trade liquid dangerous goods transportation market gradually increased. In the future, the company will launch international LPG waterway transportation business by purchasing LPG carriers from overseas subsidiaries in due course, further broadening the scope of the company's main business and enhancing the company's comprehensive competitive strength.

Profit forecast: First coverage, giving the company an “increase in holdings” rating. It is estimated that in 2023-2025, the company will achieve operating income of 11.61/14.86/1,775 billion yuan, net profit of 216/2.76/335 million yuan respectively, corresponding PE of 13.67x/10.71x/8.81x, respectively.

Risk warning: changes in overseas macroeconomic factors exceed expectations; risk of declining performance due to fluctuations in the chemical industry; risk of changes in capacity regulation policies; risk of changes in capacity regulation policies; risk of safety management and environmental protection risks; risk of capacity expansion and rapid diversification of business; risk of relative concentration of customers; risk of relative concentration of customers; profit forecasts and valuation models falling short of expectations