Owners of 2023Q3 parent companies accounted for total comprehensive revenue of $283 million, an increase of 55% over the previous year. In 2023Q3, the company achieved comprehensive revenue of about 5.461 billion yuan, down 5.52% from the previous year, up 3% from the previous year; the comprehensive net profit was about 378 million yuan, up 19.62% from the previous year, up 35% from the previous year; and the total revenue attributable to the owners of the parent company was about 283 million yuan, up 32.86% from the previous year, up 55% from the previous year. The company's consolidated revenue for the first three quarters was 17.52 billion yuan, up 0.02% year on year, and comprehensive net profit was about 1.156 billion yuan, down 27% year on year. Total overall revenue attributable to parent company owners was 829 million yuan, down 27% year on year.
By product: 1) Finished urea. The company's urea revenue for the first three quarters of 2023 was about 4.893 billion yuan, down 4% year on year, gross margin was 31%, which was basically the same year on year; 2) automotive urea solution, the company's automotive urea solution sales revenue for the first three quarters of 2023 was about 330 million yuan, down 21% year on year, and main gross margin increased by 7.7 pct to 30%; 3) compound fertilizer, the company's compound fertilizer sales revenue for the first three quarters of 2023 was about 4.687 billion yuan, down 2% year on year, and gross margin fell by about 2.4 pct to 12.4%; 4) methanol Methanol sales revenue for the first three quarters was about 1,581 billion yuan, down 9% year on year, and main gross margin was minus 1%, which is basically the same level as last year; 5) Melamine, the company's melamine sales revenue for the first three quarters of 2023 was about 571 million yuan, down 29% year on year, and gross margin fell 19pct to 34%; 6) Pharmaceutical intermediates, the company's pharmaceutical intermediates sales revenue for the first three quarters was about 439 million yuan, up 37% year on year, gross margin fell 3.6pct to 11%; 7) DMF, the company's DMF revenue was 783 million yuan Sales volume exceeded 174,000 tons, gross margin was about 14%, and market share reached more than 30%.
The new project is progressing smoothly. 1) Urea: The 700,000-ton urea project at the company's Xinxiang base in Henan was successfully put into operation, and the production capacity was further expanded, and the flexible control capacity in the park continued to increase, providing strong support for the company's efficient operation; 2) Compound fertilizer: The company issued an announcement on November 18, 2022. The company's subsidiary, Liaoning Xinlianxin, plans to build a million-ton ecological fertilizer project in Dayushan Economic Development Zone in Huludao, Liaoning. The project is mainly divided into three phases. The first phase of the planned production capacity of 55,000 tons will be completed and put into operation by the end of the year, comprehensively optimizing the compound fertilizer market layout; 3) DMF: In January 2023, the second DMF project at the company's Jiangxi base was successfully put into operation, and the company's DMF production capacity increased to 200,000 tons/year.
The production mode can be adjusted flexibly and has the advantage of energy consumption. The company adopts the “one end, many tails, flexible adjustment” production model, and minimizes the adverse impact of market fluctuations on performance through flexible adjustment of products and extension of the industrial chain; the company starts from its own characteristics and advantages, takes low-cost synthetic gas as the core, and uses the company's advantages in basic chemical raw materials such as hydrogen, nitrogen, and synthetic gas to develop downstream and related diversified development in coal chemicals. In terms of energy consumption, according to the 2022 annual report, the company continues to rank first in the industry with a comprehensive energy consumption of 1182.6 kg per ton of ammonia.
Profit forecasts and investment ratings. Due to falling prices of the company's main products, we have lowered our profit forecast for the company. We expect the company's net profit from 2023-2025 to be 11.67 (-33.33%), 14.36 (-28.90%), and 1,760 billion yuan (-21.14%), respectively, corresponding to EPS of 0.96, 1.18, and 1.44 yuan, respectively. Combining comparable company valuations and AH stock valuation differences, the company was given 5 times PE in 2023, with a corresponding target price of 4.8 yuan. Based on the exchange rate of HKD to RMB 0.93, the corresponding target price was HK$5.16 (target price of $8.50 for the previous period, based on 5.2 times PE in 2023, -39.29%), maintaining the “superior to market” rating.
Risk warning. Prices of raw materials fluctuate, downstream demand falls short of expectations, progress of projects under construction falls short of expectations, and macroeconomic fluctuations.