Q3 revenue and net profit improved month-on-month, and cyclical business profits continued to be under pressure. The company released the 2023 three-quarter report. The company's revenue for the first three quarters was 21.928 billion yuan, -11.78% year-on-year; net profit was 934 million yuan, -80.98% year-on-year. Among them, Q3 achieved revenue of 8.318 billion yuan, +10.07% year-on-year and +18.18% month-on-month; net profit of 325 million yuan, -74.21% year-on-year and +104.2% month-on-month; and Q3 revenue and net profit improved month-on-month. Considering that the boom in cyclical products such as phosphate fertilizer, glyphosate, and silicone DMC affects the company's performance, we lowered our 2023-2025 profit forecast. The company's net profit for 2023-2025 is estimated to be 13.39 (-8.42), 17.15 (-15.03), and 21.95 (-15.37) yuan, EPS is 1.20 (-0.76), 1.54 (-1.35), and 1.97 (-1.39) yuan/share. The current stock price corresponding to 2023-2025 PE is 16.5 , 12.9, 10.1 times. Influenced by traditional cyclical business, the company's performance is under pressure in the short term. The company insists on playing the core supporting role of R&D and innovation. The diversified product structure helps to slowly restore profits. We are optimistic that the company's conversion of old and new kinetic energy will accelerate towards a world-class fine chemical enterprise and maintain its “buy” rating.
The first phase of the iron phosphate project was successfully put into operation, and Indonesia's Aimok was acquired, and the internationalization strategy entered a new stage. On September 4, the company announced that the holding subsidiary Hubei Xingyou New Energy's “New 200,000 tons/year Ferric Phosphate Project (Phase I 100,000 tons/year iron phosphate)” production line has been officially fully put into operation. The project has a high degree of automation, stable and reliable processes, good product consistency, and overall excellent quality. The completion and commissioning of the project will help the company make full use of the advantages of industrial integration, accelerate the improvement of the layout of the new energy industry, promote industrial transformation and upgrading, and cultivate new profit growth points.
On October 24, the company's public account reported that its wholly-owned subsidiary, Xingfa Hong Kong, successfully acquired Indonesia's Imok Company. The latter had a design production capacity of 5,694 tons of paraquat, a capacity utilization rate of 72.47% in 2022; at the same time, it has a production line for the preparation and filling of products such as herbicides, insecticides, fungicides, plant growth agents, acaricides and helicides, etc., including paraquat and glyphosate agents, with a production capacity of 21,900 tons/year for preparation and filling; Holds a total of 36 trademark registration certificates and 42 A pesticide product license. The paraquat series products it produces account for 10% of the market share of the Indonesian market, and the 4 paraquat brands it holds are all well-known brands in the Indonesian market. Indonesia's Imok is the first production enterprise that the company has acquired overseas. The completion of the equity acquisition process marks a new stage in the company's internationalization strategy.
Risk warning: price fluctuations of raw materials and products, project progress falling short of expectations, safety and environmental risks, etc.