3Q23 achieved loss reversal. In the first three quarters of 2023, the company achieved operating income of 69.860 billion yuan, +20.91% year-on-year; net profit was 719 million yuan, a year-on-year decrease of 1,233 billion yuan. Among them, 3Q23 achieved operating income of 24.922 billion yuan, +109.81% year-on-year and +8.55% month-on-month; net profit was 269 million yuan, reversing losses to profits over the previous year.
Product price spreads have improved, and the company's gross profit has been restored. In the third quarter of 2023, the price spread for aromatic hydrocarbons remained at a high level. Meanwhile, oil prices fluctuated upward in the third quarter. Brent oil prices rose from 75 US dollars/barrel to 95 US dollars/barrel, an increase of 27.7%. We believe that the rise in oil prices will help improve the company's profits. In 3Q23, the company achieved gross profit of 4,522 billion yuan, reversing losses year-on-year, increasing 50.0% month-on-month, returning to a good level in a single quarter since 2022.
Downstream demand gradually improved, and production and sales of major products increased year over year. In the first three quarters of 2023, the overall production and sales volume of the company's main products showed an upward trend. Among them, the production and sales volume of refined oil products was 654.92/6.1287 million tons, respectively, up 68.8%/62.3% year on year, aviation kerosene production and sales increased by more than 130% year on year; production of major intermediate petrochemical products (aromatic hydrocarbons, ethylene, ethylene glycol, etc.) was 1,540,300 tons, +23.1% year on year; production and sales of major resin and plastic products (polyethylene, polypropylene, polyester chips) were 7928/741,400 tons, respectively, up 26.6%/23.3% year on year.
Seek steady progress in 2023. According to the company's 2022 annual report, in 2023, the company adheres to stability and progress. It plans to process a total of 13.6 million tons of crude oil throughout the year, and plans to produce 8.01 million tons of refined oil products, 756,000 tons of ethylene, 68.0 million tons of para-xylene, and 698,700 tons of new synthetic resin products and special materials.
At the same time, research on key core technologies and construction of key projects will be accelerated, capital expenditure of 3.7 billion yuan is planned throughout the year, 48K large wire bundles will be commercialized during the year, phase II plant construction will commence, construction of a 100-ton high-performance carbon fiber test device and aviation composite pilot plant will be built, and construction of 250,000 tons/year thermoplastic elastomer projects will be accelerated.
Profit forecasts and investment ratings. We expect the company's EPS from 2023 to 2025 to be -0.03, 0.06, and 0.09 yuan, respectively, and BPS in 2023 at 2.40 yuan. Referring to the valuation levels of comparable companies, we give them 1.4-1.5 times PB in 2023, corresponding to the reasonable value range of 3.36-3.60 yuan, and maintain the “superior to the market” rating.
Risk warning: The price of crude oil has fluctuated greatly, the profit of refined oil products has declined, and the price spread of petrochemical products has narrowed.