Incidents: According to the 2023 three-quarter report of Sanmei Co., Ltd., the company's operating income for the first three quarters was 2,609 billion yuan, down 30.76% year on year; net profit was 238 million yuan, down 48.45% year on year. Maintain a “buy” rating.
The decline in refrigerant prices is dragging down the company's performance. According to the 2023 three-quarter report, the company's operating income for the first three quarters was 2,609 million yuan, a year-on-year decrease of 30.76%; net profit was 238 million yuan, a year-on-year decrease of 48.45%. Among them, the company's revenue for the third quarter was 873 million yuan, down 8.97% from the previous month; net profit was 108 million yuan, down 1.27% from the previous month. The company's sales prices for fluorine refrigerants, fluorine foaming agents and hydrogen fluoride in the first three quarters were 20,696 yuan/ton, 2,2024 yuan/ton, and 7290 yuan/ton, respectively, down 21.13% year on year, up 22.88%/and 9.75%, respectively. The main reason for the decline in the company's performance was the sharp decline in the price of fluorine refrigeration doses for the core product due to insufficient downstream demand.
Endogenous expansion+implementation of industry policies is expected to drive the company's operations to continue to improve. On October 24, 2023, the Ministry of Ecology and Environment held an executive meeting to review and approve the “2024 Total HFC Quota Setting and Allocation Plan”. Supply constraints for three generations of refrigerants have been officially implemented, and industry supply will gradually tighten. The steady rise in demand for third-generation refrigerants combined with the gradual tightening of supply is expected to drive product prices up, and third-generation refrigerants may enter a boom cycle. The company actively lays out business fields such as new materials and new energy, and extends to downstream high-value-added fields of fluorine chemicals. At present, the company has laid out projects with an annual output of 3,000 tons (the first phase is 500 tons), 5,000 tons of FEP, 5,000 tons of PVDF, 6,000 tons of lithium hexafluorophosphate, 100 tons of high-purity phosphorus pentafluoride (PF5), 1,200 tons of R116, and 20,000 tons of high-purity electronic grade hydrofluoric acid.
Investment suggestion: Sanmei Co., Ltd. is an advanced domestic fluorine chemical enterprise. The implementation of refrigerant industry policies is expected to drive the company's operations to continue to improve. The company's 2023/2024/2025 EPS is expected to be 0.53 yuan, 0.87 yuan, and 1.1 yuan respectively. The current market value corresponds to PE 57X, 35X and 28X, maintaining the “buy” rating.
Risk warning: falling product prices, falling demand, project progress falling short of expectations, etc.