Description of the event
On October 27, the company announced its results for the third quarter of 2023. In the first three quarters of 2023, the company achieved total revenue of 21.928 billion yuan, -11.78%, net profit of 934 million yuan, -80.98%; in Q3 of 2023, total operating income of 8.318 billion yuan, +10.07%, +18.18% over the previous year, achieving net profit of 325 million yuan, -74.21% year-on-year, +104.20% year-on-year.
The company's cyclical product boom declined, and the performance of the first three quarters declined under pressure. The company achieved total operating income of 21.928 billion yuan in the first three quarters of 2023, -11.78% year-on-year, and net profit of 934 million yuan, or -80.98% year-on-year. The main reason is that the market prices of the company's cyclical products such as glyphosate, silicone, yellow phosphorus, and phosphate fertilizer declined significantly year over year, and production and sales also declined to varying degrees year on year, leading to a sharp decline in product profitability. From the sales side, the company's glyphosate series products, silicone series products, special chemicals, fertilizers, food additives, yellow phosphorus, wet electronic chemicals, and phosphate ore in the first three quarters of 2023 were 12.19, 14.20, 19.88, 90.17, 14.06, 1.93, 6.24, and 1,4995 million tons, respectively, +299%, -18%, -17%, -15%, +15%, -29%, -30%; from the price point of view, the company's glyphosate series products and silicone products in the first three quarters of 2023 The average sales prices of series products, specialty chemicals, fertilizers, food additives, yellow phosphorus, wet electronic chemicals, and phosphate ore were 25553.47, 11879.15, 9609.13, 2937.76, 10119.37, 23726.21, 8611.08, and 620.38 yuan/ton, year-on-year: -57%, -40%, -41%, -18%, -17%, -20%, -10%, +17%.
Prices of some products rebounded, and third-quarter results improved significantly month-on-month, and Q3 of 2023 achieved total operating income of 8.318 billion yuan, +10.07% year-on-year, +18.18% month-on-month, and net profit of 325 million yuan, -74.21% year-on-year, and +104.20% month-on-month.
The company's profit improved month-on-month, mainly due to the company's rebound in the prices of yellow phosphorus, phosphate fertilizer, and wet electronic chemicals, and the increase in demand for products such as fertilizers and additives. Looking at the sales side, the sales volume of 2023Q3's glyphosate series products, silicone series products, special chemicals, fertilizers, food additives, yellow phosphorus, wet electronic chemicals, and phosphate ore was 4.04, 4.71, 6.89, 41.10, 4.88, 0.52, 1.93, 63.42 million tons, respectively, -22%, -9%, +3%, +58%, +7%, +6%, -12%, 13%; from the price side, 2023Q3's glycyrrhizoid series products, fertilizer chemicals, specialty chemicals fees, The average sales prices of food additives, yellow phosphorus, wet electronic chemicals, and phosphate ore were 23151.70, 10510.51, 8661.35, 2508.96, 9071.53, 22526.12, 9589.31, and 628.96 yuan/ton, respectively, -1%, -11%, -9%, -25%, -11%, +10%, +18%, and +9%, respectively.
Silicones and wet electronic chemicals continue to be added, and the growth sector is poised for silicone: the 2200 tons/year microcapsule project planned by the company includes a 200 tons/year photovariable/temperature variable microcapsule powder production line, 2000 tons/year phase change, fragrance, antibacterial, etc., of which the first phase of 550 tons/year was completed and put into operation in March, and now mass sales have been achieved; Hubei Ruijia 200,000 tons/year RTV project (phase I) has entered the trial stage of operation after completion in mid-July; 400,000 tons/year in Inner Mongolia The annual silicone project is under construction; Hubei Xingrui 3 The first phase of the 10,000 tons/year liquid rubber project is expected to be completed and put into operation within the year, the 50,000 tons/year photovoltaic rubber project will be completed and put into operation in mid-July, and the 400,000 tons/year silicone new material project is under construction, strengthening the integration process of the company's upstream and downstream silicones.
Wet electronic chemicals: The subsidiary Xingfu Electronics spin-off and listing application was accepted by the exchange. Currently, it is in the inquiry and feedback stage. After the spin-off, Xingfu Electronics will act as an independent electronic chemicals business platform to accelerate the development of the company's wet electronic chemicals business. The 40,000 tons/year ultra-high purity electronic chemical project under construction in the Xingfu Shanghai Special Area (including 30,000 tons/year electronic grade sulfuric acid plant and supporting projects, 10,000 tons/year electronic grade functional chemical plant and supporting projects, public works, etc.), the project under construction at the Xingfu Yichang base (including 30,000 tons/year electronic grade phosphoric acid, 20,000 tons/year of electronic grade ammonia, 20,000 tons/year of electronic grade ammonia, 20,000 tons/year of electronic grade ammonia) is expected to be put into operation one after another in 2023-2024, which is expected to open the second growth curve.
Actively lay out the new lithium battery materials sector, and the supply of lithium ore is sufficient
With the gradual increase in the production of new energy vehicles and the increase in the proportion of lithium iron phosphate installed, the company has seized the opportunity to explore the field of new materials for lithium batteries. The company's phosphating agent project has completed 800 tons/year testing, and is currently developing 5,000 tons/year industrial plant design. The holding subsidiary, Hubei Xingyou New Energy Technology Co., Ltd., has fully put into operation the “New 200,000 tons/year Ferric Phosphate Project (Phase I: 100,000 tons/year of ferric phosphate)”. The company's 5,000 m3/year aerogel felt project, the 300,000 tons/year lithium iron phosphate phase I project of the participating company Hubei Youxing, and the 100,000 tons/year battery-grade lithium dihydrogen phosphate project of the lithium phosphate industry will be completed and put into operation throughout the year. In addition, the company and Sichuan Stray plan to cooperate to build a spodumene beneficiation plant with an annual output of 3 million tons. The first phase of construction is 600,000 tons/year, which is expected to be completed and put into operation within 2023. The company has signed strategic cooperation agreements with local lithium mining companies, and the company has priority procurement rights for the lithium concentrate it produces.
Investment advice
The company's net profit for 2023-2025 is estimated to be 13.87 billion yuan, 21.15 billion yuan, and 2,918 billion yuan respectively (the original forecast values were 15.28, 21.17, and 2,921 billion yuan), with year-on-year growth rates of -76.3%, 52.5%, and 38.0%. The corresponding PE is 15.65, 10.26, and 7.44 times, respectively. Maintain a “buy” rating.
Risk warning
(1) Risks caused by price fluctuations of raw materials and major products; (2) production safety risks;
(3) Environmental protection risks;
(4) Project commissioning progress fell short of expectations.