Description of the event
The company released its three-quarter report for 2023, achieving total operating income of 9.780 billion yuan, +0.1% year-on-year; realized net profit of 851 million yuan, -32.7% year-on-year; and realized net profit of 805 million yuan, or -33.7% year-on-year.
Among them, 2023Q3 achieved operating income of 3,336 billion yuan, -7.0% year-on-year; realized net profit of 326 million yuan, -37.6% year-on-year, and realized net profit of 302 million yuan after deducting non-attributable net profit of 320 million yuan, or -39.2% year-on-year.
Incident comments
Net interest rates rose slightly month-on-month. According to Zhuochuang information, the price of rare gases in Q3 continues to be under pressure, while the price performance of oxygen, nitrogen, and argon is divided. The price of liquid oxygen climbed to a high point during the year in July. Although there was a decline in August to September, the average price of liquid oxygen in Q3 rose month-on-month; the average price of liquid nitrogen remained basically the same; and the average price of liquid argon rose slightly from the end of July to the beginning of August. In 23Q3, the company achieved a gross profit margin of 24.4%, a year-on-year decline of 6.3 pct, a year-on-year increase of 0.7 pct; a net sales profit margin of 10.1%, a year-on-year decline of 5.1 pct, a year-on-year increase of 1.6 pct. Among them, the 23Q3 company's asset impairment recovered to 47.4 million yuan, which may be related to an improvement in the receivables structure. As of September 30, the company had 920 million yuan in notes receivable and 1.74 billion yuan in accounts receivable. Compared with the company's notes receivable of 770 million yuan and accounts receivable of 1.74 billion yuan as of June 30, the company's receivables increased month-on-month, but the share of accounts receivable declined, the receivables structure improved, and its ability to withstand risks improved.
The scale of newly signed gas projects exceeds that of the whole of 2022. On October 9, the company announced 3 newly signed gas investment projects, including the Qingdao Hangxi Electronics Bulk Gas Phase II project. The scale of the company's new gas investment projects has remained at a high level in recent years. The new oxygen production volume of the gas investment projects in 2021 and 2022 was 640,000 Nm, respectively? /h. Up to now, the company announced in 2023 that the scale of new gas supply projects is expected to reach 450,000 Nm? /h (Assuming the scale of the Qingdao Electronics Bulk Gas Phase II project is 20,000 square meters, which is consistent with the scale of the first phase). The operation of gas projects is expected to smooth out fluctuations in the downstream demand cycle. Currently, the company has sufficient gas projects in hand, and it is expected that projects under construction will gradually be put into production and supply in the next few years, providing the company with increased performance.
Continue to promote internationalization, and both equipment and gas businesses go overseas. Since this year, the company's internationalization strategy has continued to advance. 23H1's overseas petrochemical equipment orders have reached a record peak, directly driving the rapid growth of equipment orders; the company completed the first overseas investment gas project and established Indonesia Hangxi, thus accumulating overseas investment experience and enhancing the company's competitiveness and influence in overseas markets. As the company's overseas business continues to expand, it is expected to continue to drive the company's revenue growth and increase the company's profitability.
The impact of rare gas price factors is gradually decreasing, so we expect downstream demand and gas prices to pick up. In 22Q4, the price of rare gases fell sharply, and the base for the same period was low. The impact of the high price base in the previous period is expected to gradually be eliminated. Looking ahead to Q4, with the gradual recovery of the manufacturing industry, industry demand is expected to bottom out and pick up, gas prices are expected to improve overall, and the company is expected to benefit. Furthermore, the company's indirect shareholders' participation in the Yingde Gas acquisition continues to advance, which is expected to have a positive impact on the company's competitive landscape and profitability in the future.
It is estimated that in 2023-2025, the company will achieve net profit of 1.20, 15.3, and 1.85 billion yuan, corresponding to PE of 26, 20, and 17 times, maintaining the “buy” rating.
Risk warning
1. The risk of increased competition in the industry;
2. Risk of sluggish gas price performance.