Event: Jiang Han New Materials released its 2023 three-quarter report. The first three quarters achieved operating income of 1,751 billion yuan, a year-on-year decrease of 34.22%; net profit attributable to shareholders of listed companies was 535 million yuan, a year-on-year decrease of 35.65%. Based on a total share capital of 373 million shares, it achieved earnings of 1.46 yuan per share and operating cash flow of 1.44 yuan per share. Among them, the third quarter achieved operating income of 574 million yuan, a year-on-year decrease of 29.4%, -3.8%; net profit attributable to shareholders of listed companies was 160 million yuan, a year-on-year decrease of 35.38%, -27.4% over the previous year; and a quarterly EPS of 0.43 yuan.
In the first three quarters, the sales volume of the company's functional silane products increased year on year. Affected by the decline in industry prosperity, the average product price declined year on year. According to the company's announcement, the company produced 78,200 tons of functional silane products in the first three quarters, with sales volume reaching 78,500 tons, an increase of 99,400 tons over the previous year (691,000 tons in '22), yoy +13.6%; the production of functional silane intermediates was 137,000 tons, with sales volume of 0.16 million tons, mainly for personal use, and a small amount of foreign sales. Looking at a single quarter, 23Q3 functional silane production was 28,500 tons, sales volume was 29,900 tons, sales volume increased 0.3,900 tons, QoQ +15.4%; production of functional silane intermediates was 51,700 tons, sales volume was 946 tons, sales volume increased 329 tons, QoQ +53.4%. In terms of price, functional silane products in the first three quarters achieved revenue of 1,714 million yuan, average sales price of 21,800 yuan/ton, yoy -43.1%; functional silane intermediates achieved revenue of 225 million yuan, average sales price of 15,500 yuan/ton, yoy -55.3%; in a single quarter, 23Q3 functional silane achieved revenue of 555 million yuan, average sales price of 191,000 yuan/ton, q-17.4%; functional silane intermediates achieved revenue of 115 million yuan, average sales price of 15,800 yuan/ton, q+ 5.0% According to Baichuan Yingfu and Longzhong, the average market price of 23q3kh-550/kH-570/A-171/Si-69 was 2.47/3.23/2.45/1.89/1.75,000 yuan/ton, respectively, -53.3%/-48.7%/-27.3%/-20.9%/-44.8%, -12.8%/-1.9%/-7.6%/-3.9%/-3.9%/-3.4%. We speculate that the month-on-month decline in the average sales price of main products in the third quarter was the main reason affecting the company's revenue level in the third quarter. Entering the fourth quarter, the average market prices of the above products showed a rebound trend. As of 11/3, they had risen to 2.7/3.8/2.5/2/20,000 yuan/ton, respectively.
In terms of profit, the company has strong cost management capabilities. In the first three quarters, the company achieved gross profit of 639 million yuan, yoy -44.8%, comprehensive gross profit ratio of 36.5%, yoy-7.0pcts; in the third quarter, it achieved gross profit margin of 192 million yuan, yoy -44.9%, q-11.9%, comprehensive gross profit ratio of 33.5%, yoy-9.4pcts, and q-3.1pcts, of which the cost ratio for the period was 4.3%, yoy+2.9pcts, of which the sales/management/development/finance expense ratio was 0.8. %/ 2.3%/3.1%/-1.9%, yoy+0.03/-1.32/-0.30/+4.53pcts
The main product continues to expand its capacity and steadily advance fund-raising projects. The company has 14 series of more than 100 functional silane products, with a rich product range and diversified structure. Among them, functional silane fund-raising projects have been partially completed, aminosilane has begun to release production capacity, and epoxy silanes, etc. are expected to be gradually released by the end of this year and the beginning of next year. Sulfur-containing silane is expected to be put into production in the second half of 2024, and the entire project is in production by July 2025. The total production capacity of the company's functional silane has reached 152,000 tons. At the same time, the company announced on August 21 that it plans to invest 1 billion yuan (self-funded) to build a package of new silicon-based materials projects. After the completion of the project, it will help the company expand the scale of its main business. In total, it will form a production capacity of 182,000 tons/year of functional silane products. In addition, the company's fund-raising project for the 6N grade high-purity quartz sand project has now achieved sample delivery of tonnage prototypes in the pilot test. The pilot target has basically been achieved, and production design will be carried out in the next step.
Profit forecast and valuation: Combining the company's product price trends and the pace of future production capacity investment, we expect the company's net profit from 2023 to 2025 to be 7.01/8.22/9.06 (previous value was 8.58/11.10/12.95) billion yuan, respectively, maintaining the “buy” investment rating.
Risk warning: macroeconomic downturn risk, risk of large fluctuations in product and raw material prices, progress of new construction projects and risk of profits falling short of expectations