Net profit attributable to 2023Q3 fell 48.40% month-on-month, optimistic about the company's potential to extend its industrial chain
The company released its 2023 three-quarter report. The first three quarters achieved revenue of 19.886 billion yuan, an increase of 8.81% over the previous year, and net profit of 2.185 billion yuan, a year-on-year decrease of 52.03%. Among them, 2023Q3 achieved revenue of 7.949 billion yuan, an increase of 28.02% over the previous month, and realized net profit of 402 million yuan, a decrease of 48.40% over the previous month. The company's performance is in line with expectations. We maintain the company's profit forecast. It is estimated that the company's net profit from 2023-2025 will be 28.64, 39.13, and 5.103 billion yuan, respectively, and the EPS will be 2.42, 3.31, and 4.32 yuan respectively. The current stock price corresponding to PE is 22.9, 16.8, and 12.9 times, respectively. We are optimistic that the company, as a leader in domestic industrial silicon and silicone, has the potential to extend to downstream photovoltaics and other industrial chains, and maintain a “buy” rating.
The increase and decrease in the sales volume of 2023Q3 industrial silicon and silicone caused the company's performance to weigh on the company's performance. In terms of sales volume, the production of industrial silicon and silicone of 2023Q3 reached 25.92 and 345,200 tons, respectively, and -29.59% and -3.40%, respectively. The sales volume reached 3618 and 276,300 tons, respectively, of +50.26% and +49.03% month-on-month. In terms of prices, according to Baichuan Yingfu data, due to weak downstream demand and the release of new production capacity, the average prices of 2023Q3 industrial silicon and silicone DMC were 14011 and 13,631 yuan/ton, respectively, -5.40% and -7.83% month-on-month. 2023Q3 Although the company's industrial silicon and silicone sales volume have increased dramatically, the decline in product prices has put pressure on its performance. Looking ahead, the current prices of industrial silicon and silicone have rebounded steadily. According to Baichuan Yingfu data, the average prices of industrial silicon and silicone DMC in October 2023 were 15,424 and 14578 yuan/ton respectively, which is +14.11% and +8.40% lower than the price in July, respectively. We believe that 2023Q3 may be the company's low performance. Following the further recovery of the national economy, profits from industrial silicon and silicone products are expected to continue to recover.
The layout of the photovoltaic industry chain is progressing gradually, and the company is expected to enter a period of concentrated performance release. According to the company's investor relations activity records, the company's subsidiary Chubu Hesheng's high-purity polysilicon project with an annual output of 200,000 tons was tested in September 2023, while the Hesheng Dongbu Hesheng high-purity polysilicon project with an annual output of 200,000 tons is expected to be put into operation one after another in 2024Q1. In addition, the company's photovoltaic module projects with an annual output of 20 GW are also expected to be put into operation in batches starting in 2023Q4. As the layout of the photovoltaic industry chain gradually progresses, the company is expected to usher in a period of concentrated performance release.
Risk warning: Project commissioning falls short of expectations, downstream demand falls short of expectations, raw material prices fluctuate greatly, etc.