Event: In the first three quarters of 2023, the company achieved revenue of 3,229 billion yuan, an increase of 18.69% over the previous year, and net profit of 162 million yuan, a year-on-year decrease of 28.86%. Among them, the third quarter achieved revenue of 1,149 billion yuan in a single quarter, an increase of 20.37% over the previous year, and deducted non-net profit of 49.42 million yuan in a single quarter, a year-on-year decrease of 28.64%. Compared to the second quarter, the company's revenue increased and profit declined. We expect that with the implementation of refrigerant quotas, the rise in refrigerant prices will drive the company's performance to improve.
Revenue increased in the third quarter, and profit declined. In the third quarter of 2023, the company's sales volume of fluorocarbon chemicals was 31,700 tons, up 28.0% year on year, up 7.4% month on month; sales of fluoropolymer materials were 8,607 tons, up 234.6% year on year, up 34.9% month on month; sales of chemical raw materials were 55,400 tons, up 85.0% year on year and 4.3% month on month. In terms of revenue, revenue from fluorocarbon chemicals was 622 million yuan, up 2.6% year on year, up 3.1% month on month; revenue from fluoropolymer materials was 365 million yuan, up 81.3% year on year, up 4.4% month on month; and chemical raw materials revenue was 132 million yuan, up 11.2% year on year, down 17.8% month on month. The gradual release of production capacity at the company's Shaowu base in Fujian is the main driving force for the company's revenue growth, but insufficient market demand and lower refrigerant prices are dragging down performance. With the gradual implementation of the 2024 refrigerant quota regulations, refrigerant prices are expected to gradually rise.
Production capacity at the Shaowu base has been gradually released, and fluorine-containing polymer materials have boosted the company's performance. The company focuses on fluorine-containing polymer materials products. As of June 30, 2023, the annual production capacity of fluoropolymer materials and monomers is 593,000 tons, leading in the country in terms of quality and production capacity of major products. The first phase of the 2022 Shaowu base project was completed and put into operation one after another. The first phase of 50,000 tons/year AHF was completed and put into operation in June 2022, 44,000 tons/year HCFC-22, 40,000 tons/year HFC-32, 28,000 tons/year TFE, 60,000 tons/year of calcium chloride, 10,000 tons/year HFP, etc., successfully started trial production at the end of 2022 and March 2023, adding vitality to the company's chemical raw materials, fluorocarbon chemicals and fluoropolymer materials sectors; the first phase was 750,000 tons/year FE/year; P (flexible production The (0.3 million tons/year PFA) device has been put into operation, laying the foundation for the company to expand the fluoropolymer material track. The second phase of the Shaowu Yonghe Fluorochemical Production Base project and the 10,000 tons/year PFPO and 30,000 tons/year HFPO expansion projects have also entered the full construction stage. The company is a leading enterprise in these product areas and is expected to further expand its market share and help the company develop rapidly.
The HFCs quota plan has been implemented, and the refrigerant market is expected to gradually pick up. On November 6, the Ministry of Ecology and Environment issued the “2024 Total HFC Quota Setting and Allocation Plan”. The plan determines that the baseline value of HFCs production in China is 1,853 billion tCO2, and the baseline value of HFCs usage is 905 million tCO2 (including imported baseline value of 05 billion tCO2). The HFCs (excluding HFC-23) production quota accounting of enterprises is calculated according to the gross production volume of each variety in 2020-2022. The HFCs of the same variety can be adjusted in equal amounts between production units, and adjustments for different varieties can only be adjusted when applying for 2024 quotas. Supply-side HFC production and supply are gradually being tightened, and downstream industries such as home appliances and automobiles on the demand side are picking up, and the refrigerant market is expected to rise.
Maintain an “overweight” investment rating. Considering that this year's refrigerant price increase fell short of expectations, we expect the company's 2023-2025 revenue to be 4.336 billion yuan, 5.594 billion yuan and 6.656 billion yuan respectively, net profit of 251 million yuan, 569 million yuan and 734 million yuan respectively, and EPS of 0.66 yuan, 1.50 yuan and 1.94 yuan respectively. The current stock price corresponding to PE is 38.1 times, 16.8 times, and 13.0 times, respectively, maintaining an investment rating of “increased holdings”.
Risk warning: Product prices fluctuate greatly, raw material prices fluctuate greatly, and the commissioning of new production capacity falls short of expectations.