Description of the event
The company disclosed its three-quarter report for 2023. The first three quarters achieved operating income of 131,036 billion yuan, an increase of 9.15% over the previous year; imputed net profit of 3.723 billion yuan, an increase of 0.08% over the previous year; and net profit attributable after deduction of 3.707 billion yuan, an increase of 2.72% over the previous year.
Incident comments
The company's revenue for the third quarter declined year on year, or because the pace of investment by downstream owners slowed down. Overall, revenue maintained high single-digit growth in the first three quarters. The company achieved revenue of 131,036 billion yuan in the first three quarters, up 9.15% year on year; revenue for the third quarter alone was 40.106 billion yuan, down 11.38% year on year.
The company's gross margin increased year over year, and the expense ratio also increased. The overall net interest rate level fell slightly year over year. The company's comprehensive gross profit margin for the first three quarters was 8.22%, up 0.47pct year on year. Looking at the third quarter alone, the company's comprehensive gross profit margin was 7.95%, up 0.98pct year on year; in terms of expense ratio, the company's expenses for the first three quarters were 4.69%, up 0.62 pct year on year. Among them, sales, management, R&D and financial expenses changed by 0.01, 0.12, 0.26, 0.23pct to 0.23%, 1.59%, 2.98% and -0.12%, and the cost rate for the third quarter increased 5.84% year on year, up 5.84% year on year, year over year 1.82pct, of which the sales, management, R&D, and financial expense ratios changed year-on-year by 0.06, 0.67, 0.48, and 0.61pct to 0.27%, 1.84%, 3.68%, and 0.06%, respectively.
Overall, the company's net profit margin for the first three quarters was 2.84%, down 0.26pct year on year, down 0.26pct year on year; net profit margin after deduction was 2.83%, down 0.18pct year on year; net profit margin for the third quarter was 1.94%, down 0.43pct year on year, down 0.43pct year on year, down 1.89% year on year, down 0.41pct year on year.
The company's net cash flow outflow for the first three quarters narrowed year-on-year, and the number of accounts receivable turnover days was shortened. The company's net cash flow from operating activities in the first three quarters was 3.367 billion yuan, a year-on-year decrease of 3,018 billion yuan, a year-on-year decrease of 84.06%, a year-on-year decrease of 8.95pct; in the third quarter alone, net cash flow from operating activities was 3,593 billion yuan, an increase of 1,687 billion yuan, a year-on-year increase of 109.90%, a year-on-year increase of 21.35pct; at the same time, the company's balance ratio increased by 0.82 pct to 70.99%, and the number of days of turnover of accounts receivable decreased by 1.32 to 54.67 days year on year.
The company's overseas orders have increased significantly over the same period last year, or it may be that Russia's major orders have been placed. It is optimistic that the company's overseas business will continue to advance. 1) Looking at the order situation, the company signed a new contract of 271,627 billion yuan in the first three quarters, an increase of 22.3% over the previous year, of which the main business, chemical engineering, signed a new contract of 225.057 billion yuan, an increase of 34.1% over the previous year. By region, domestic orders declined slightly. In the first three quarters, $19836 billion was signed, a year-on-year decline of 7.3%, and overseas business of $85.38 billion, a year-on-year increase of 305.5%. The company disclosed on October 8 (or included in the previous September order statistics) that it signed a general contracting contract for the Russian Baltic Sea gas to methanol chemical complex project with a total contract amount of 8.4 billion euros, equivalent to about RMB 65.05 billion. With the signing of iconic major projects, the company's overseas business may develop rapidly in the future. 2) The company's industry progressed steadily. In the first half of the year, the Tianchen Yaolong caprolactam project produced 168,700 tons of caprolactam at full capacity; the Tianchen Qixiang acrylonitrile plant operated at full capacity, and the upgrading of adidinitrile technology progressed smoothly; Donghua Tianye successfully produced qualified PBAT products on June 17; Tianchen Quanzhou successfully produced qualified PBAT products; Tianchen Quanzhou, 600,000 tons/year of phase change energy storage materials, etc. project construction work progressed in an orderly manner, and the industry is expected to contribute more incremental profits to the company in the future. The company is expected to achieve imputed net profit of 62.35/71.73/8.265 billion yuan in 2023-2025, corresponding to the current stock price PE of 6.82/5.93/5.14 times, maintaining the company's “buy” rating.
Risk warning
1. Industrial transformation falls short of expectations;
2. Prices of raw materials fluctuate greatly.