Q3 deducted -62.05% of non-profit year-on-year, actively paid attention to current inflection opportunities in the industry, and maintained that “buy” rating companies achieved operating income of 2,609 million yuan, -30.76% year-on-year in the first three quarters of 2023; realized net profit of 238 million yuan, -48.45% year-on-year; and achieved net profit of 170 million yuan, -60.94% year-on-year. Among them, Q3 achieved revenue of 873 million yuan in a single quarter, -27.23%; realized net profit of 108 million yuan, -7.97% of the same period; and achieved net profit after deducting non-return mother's net profit of 44 million yuan, -62.05% year-on-year. We maintain the company's profit forecast. It is estimated that net profit from 2023-2025 will be 4.19, 7.25, and 926 million yuan, and EPS will be 0.69, 1.19, and 1.52 yuan/share, respectively. The current stock price corresponding to PE is 39.6, 22.9, and 17.9 times. We believe that although Q3 in the refrigerants industry is under pressure, the current inflection point has quietly arrived, and there is room for improvement in the future to maintain the “buy” rating.
HFCs refrigerant Q3 was relatively sluggish, but the October market strengthened markedly, which may be an inflection point in the industry. The company's sales of fluorine refrigerants in the first three quarters of 2023 were 974,000 tons, -12.4% year-on-year; revenue was 2,016 billion yuan, -30.9% year-on-year. Among them, in Q3, sales of fluorine refrigerants were 34,900 tons, -9.9% year on year; revenue was 676 million yuan, -26.4% year on year. There was a marked recovery in the HFCs refrigerant market in October. According to Baichuan Yingfu data, in October 2023 (up to October 30): R32 price and spread were +18% and +41% respectively compared to Q3; R125 price and spread were +16% and +21% respectively compared to Q3; R134a price and spread were +20% and +20% compared to Q3. The refrigerant market improved significantly in October and was significantly stronger than in the previous three quarters. We believe that after the turbulence and transition in the first three quarters of 2023, the current probability is that the fundamental inflection point has officially entered the initial upward phase, and the refrigerant market Q4 may continue. 2023Q3 is expected to be a future low. Combined with the implementation of quotas issued during the year and the beginning of the 2024 quota implementation period, the industry may welcome catalysts, and it is recommended to actively seize the company's medium- to long-term layout opportunities.
The company plans to repurchase 0.5-100 million yuan of company shares. Another repurchase shows the company's long-term confidence. According to the company's announcement, the company's actual controller and chairman Hu Qixiang proposed to use the company's own funds to buy back 0.5-100 million yuan of company shares through centralized bidding, which is planned to be used for equity incentives and/or employee stock ownership plans. The company has repurchased 165 million yuan of the company's shares in 2021Q4, with an average repurchase price of 25.05 yuan/share, which is intended to be used for employee stock ownership plans or equity incentives. Continued repurchases demonstrate the company's confidence in future development.
Risk warning: production safety risks, policy change risks, poor terminal consumption, insufficient capacity utilization.