Incidents:
The company released its report for the third quarter of 2023. In the first three quarters of 2023, the company achieved operating income of 21,928 billion yuan, a year-on-year decrease of 11.78%; realized net profit of 934 million yuan, a year-on-year decrease of 80.98%; 2023Q3 achieved operating income of 8.318 billion yuan, an increase of 10.07% over the previous year, an increase of 18.17% over the previous year; and realized net profit of 325 million yuan, a year-on-year decrease of 74.21%, an increase of 104.4% over the previous year.
The price of 2023Q3 glyphosate fluctuated widely, and the prices of phosphate fertilizer and phosphate ore were gradually restored.
According to the company's business data disclosure, the average sales prices of the company's glyphosate series products, silicone series products, special chemicals, fertilizers, food additives, yellow phosphorus, wet electronic chemicals, and phosphate ore in the first three quarters of 2023 were 25549.54 yuan/ton, 1,1882.79 yuan/ton, 9607.80 yuan/ton, 2937.82 yuan/ton, 10121.42 yuan/ton, 23697.48 yuan/ton, 8615.52 yuan/ton, and 620.39 yuan/ton, respectively, -56.89 percent year-on-year, - 40.35%, -40.97%, -17.75%, -16.82%, -20.01%, -9.60%, +17.43%; sales volumes were 121,900 tons, 142,000 tons, 198,800 tons, 901,700 tons, 146,600 tons, 19,300 tons, 193,000 tons, 193,000 tons, 193,000 tons, 63,000 tons, 624,000 tons, 1,4951 million tons, -9.97%, -19.50%, +15.51%, +29.05%, -10.22%, -40.80%, +18.41% , +59.07% The year-on-year decline in prices for most of the company's products in the first three quarters of 2023 dragged down performance. Sales of specialty chemicals, electronic chemicals, etc. in the growth sector maintained year-on-year growth, and the gradual release of Houping phosphate ore brought about a relatively impressive increase in the company's performance. In the context of joint industry production restrictions and inventory removal, the price of glyphosate rose to 39,000 yuan/ton in the third quarter, and now the price has fallen back to 29,000 yuan/ton.
Prices of 2023Q3 phosphate fertilizer, phosphate ore and other products have gradually recovered. On October 30, 2023, the prices of monoammonium phosphate, diammonium phosphate and phosphate ore were 3,200 yuan/ton, 3,940 yuan/ton, and 972 yuan/ton, respectively, up 33.33%, 10.06%, and 6.46% from the end of the second quarter. As winter storage approaches and overseas inventories return to normal, it is optimistic that the company's fourth quarter performance will continue to recover.
The number of projects under construction increased year-on-year, and new materials projects helped grow performance.
The total number of projects under construction at the end of the third quarter was 5.095 billion yuan, an increase of 54.4% over the same period last year. The number of projects under construction increased significantly, providing the company with growth potential. At present, the company's new silicone materials, electronic chemicals and other projects continue to advance. The above products have large market space, high production barriers, and strong profitability. The revenue share of new materials projects is expected to continue to increase.
Investment suggestions: We expect the company's net profit from 2023-2025 to be 13.57 billion 19.61/2284 million yuan, EPS of 1.22/1.76/2.05 yuan, and corresponding PE of 16/11/10 times respectively, maintaining the “buy” rating.
Risk warning: Phosphorus chemical products have declined, and the commissioning of new projects has fallen short of expectations.