Description of the event
The company released its three-quarter report for 2023, achieving revenue of 3.23 billion yuan (+18.7% year-on-year), attributable net profit of 160 million yuan (-28.9% year-on-year), and attributable non-net profit of 150 million yuan (-24.3% year-on-year). Among them, Q3 achieved revenue of 1.15 billion yuan in a single quarter (+20.4% yoy, +0.7% yoy), 52 million yuan (-42.6% yoy, -35.6% yoy), and realized imputable non-net profit of 78 million yuan (-28.6% yoy, -36.5% yoy).
Incident comments
The company's sales volume in the fluoropolymer materials segment increased significantly. In the fluoropolymer sector, the export volume of fluorinated polymer materials of 2023Q3 company was 0.86 million tons/year, +234.6% year-on-year, +34.9%; the average price of fluoropolymer materials was 42,000 yuan/ton, -45.8% year-on-year, -22.6%. The decline in the company's fluorine-containing polymer materials sales volume and average price was mainly due to the release of additional production capacity such as HFP and FEP. According to Baichuan Yingfu, the average price of 2023Q3 hexafluoropropene (East China) was 38,000 yuan/ton, -4.2% month-on-month. Due to the release of additional production capacity and poor demand, the price of hexafluoropropylene declined; the 2023Q3 FEP market disclosed an average price of 820,000 yuan/ton, -0.1% month-on-month. In the fluorocarbon chemicals sector, the company's sales volume of fluorocarbon chemicals was +28.0% year-on-year, +7.4%; the average price of fluorocarbon chemicals was -19.8%, -4.1% month-on-month, and the purchase price of fluorite powder was +0.9% quarterly. , 2023Q3, R32, R134a, R125, R143a (factory), and R152a (factory) average prices are -3.3% month-on-month, -5.2%, -10.2%, 0%, -4.6%, average price difference -28.7%, -11.6%, +6.3%, and -36.4%. Chemical raw materials sector, 2023Q3 hydrofluoric acid, methylene chloride, methylene chloride, perchloroethylene, +0.2%, +2.8%, -6.1%, -10.3% month-on-month, respectively.
Overall, the company's Q3 gross margin was 14.1% (y-2.3 pct, -2.5 pct), net profit margin was 4.5% (y-5.0 pct, month-on-month -2.6 pct), and the period fee rate was 9.5% (y-1.0 pct, month-on-month). The change in the period fee rate was mainly due to exchange rate fluctuations, and financial expenses increased by 18.32 million yuan over Q2.
The long-term upward logic of the refrigerant boom has not changed, and it is expected that fluorine materials from Shaowu and Inner Mongolia bases will continue to be released. On September 21, 2023, the Ministry of Ecology and Environment's website published a notice seeking public comments on the “2024 Total HFC Quota Setting and Allocation Implementation Plan (Draft for Comments)”, which was reviewed and approved in principle on October 24. As of October 27, the average price of R32, R134a, R125, R143a (factory), and R152a (factory) in October was +16.3%, +20.1%, +15.7%, 0%, +5.8% compared to the average price of the third quarter; the average price difference in October compared to the average price difference for the third quarter was +30.2%, +15.5%, +20.7%, 0%, and -16.9%. Recently, benefiting from rising prices of raw materials such as fluorite, etc., prices are starting to gradually start. Alternative refrigerants will enter a long-term boom The cycle is on the rise. Shao Wu Yonghe's first-phase FEP of 0.75 million tons/year and 10,000 tons/year PTFE technicians are optimizing and debugging various product indicators. The company's PVDF, PPVE, HFPO, perfluorohexanone, and Baotou Industrial Park projects are progressing steadily.
The company and Huatai Chemical signed an “Intentional Framework Cooperation Agreement”. The two sides intend to cooperate around R&D, production and sales of the fluorine chemical industry chain based on Huatai Chemical's methane chloride sector, give full play to their respective advantages, and jointly seek suitable cooperation models and cooperation mechanisms with a view to achieving common development. Preliminary plans for the establishment of the company include HCC-240, lithium bifluorosulfonimide, HCFO-1233ZD, R22, TFE, fluorine-containing fine chemicals and other products.
Cyclically, the third-generation refrigerant boom is expected to improve over a long period of time. In terms of growth, the company's production capacity in Shaowu and Inner Mongolia has been put into production and released one after another, and long-term Baotou projects have further contributed to growth. Net profit attributable for 2023-2025 is expected to be 4.1/70/9.2 billion yuan, maintaining the “buy” rating.
Risk warning
1. The progress of the new project falls short of expectations;
2. The development of the refrigerant industry fell short of expectations.