Event: The company released its 2023 three-quarter report. From January to September 2023, the company achieved operating income of 2,609 million yuan, -30.76% year-on-year, and net profit of 238 million yuan, or -4.45% year-on-year. In Q3 of 2023, the company achieved operating income of 872 million yuan, -27.23% year-on-year, -8.92% month-on-month, net profit of 108 million yuan, -7.97% year-on-year and -1.27% month-on-month.
The volume and price of main products fell sharply from January to September 2023, and the short-term pressure was under pressure. From January to September '23, the export volume of products in the company's fluorine refrigerants, fluorine foaming agents, and hydrogen fluoride business segments was 97424.75, 6189.31, 55569.45 tons, respectively, -12.45%, -54.95%, and -6.78%. The average export prices were 20696.38, 22024.14, 7289.15 yuan/ton, -21.13%, +22.88%, -9.75%, revenue was 20.16, 1.36 and 4.05 billion yuan, respectively, -30.95% 44.64%, -15.86% The export volume of fluorine refrigerants was affected by high industry inventories at the end of the 2022 HFCs quota battle. There was a year-on-year decline. The average price was mainly dragged down by the sharp drop in the price of the product R142b. With the release of production capacity of PVDF and its supporting raw materials, the sharp drop in prices dragged down, and the overall average price of products in the fluorine refrigerant sector declined. The fluorofoaming agent sector was affected by the reduction in R141b quotas, and export sales declined, but prices rose year on year due to supply contraction.
Q3 2023 is the traditional low season for refrigerants, and sales declined slightly. In Q3 of 2023, the export volume of the company's fluorine-containing refrigerant sector products was 34948.97 tons, -1.67% month-on-month, average price was 19354.93 yuan/ton, -8.06% month-on-month, revenue was 676 million yuan, -9.59% month-on-month. Since the third quarter was a traditional low season for refrigerants, refrigerant prices and sales declined slightly month-on-month.
The implementation of the quota plan is expected to drive steady growth in the company's performance. On November 6, 2023, the Ministry of Ecology and Environment officially issued the “2024 Total HFC Quota Setting and Allocation Plan”. With the implementation of the HFCs quota plan, the future HFCs supply side will be subject to policy restrictions and gradual cuts. The company's performance as a refrigerant with a high level of flexibility will benefit fully from the long-term business cycle brought about by the HFCs quota policy in the future, and performance is expected to maintain steady growth.
Investment suggestions: We expect the company's net profit from 2023-2025 to be 316/5.29/872 million yuan, EPS is 0.52/0.87/1.43 yuan, and corresponding PE is 55/33/20 times, respectively. Considering that the company is a leader in the refrigerants industry, it will fully benefit from the recovery of the refrigerant industry's prosperity. At the same time, the company is actively deploying new fluorine-containing materials, with a lot of room for future growth and maintaining a “buy” rating.
Risk warning: Prices of upstream raw materials have soared; there is a risk of changes in quota policies; downstream demand falls short of expectations; and the commissioning progress of new construction projects falls short of expectations.