Leading enterprise with integrated fluorine chemical layout, upstream supporting hydrofluoric acid forms a cost advantage. The company's business segments at this stage mainly include fluorine refrigerants, fluorine foaming agents and hydrogen fluoride, accounting for 77.2%/14.9%/5.9% of revenue in the first half of 2023, respectively. In terms of refrigerant business, the company uses third-generation refrigerants as its core products, with R32/R125/R134a/R143a production capacity of 4/6.5/5.2/10,000 tons, respectively, and the corresponding quota for 24 years is 2.78/3.15/5.15/0.63 million tons. At the same time, the company currently has a production capacity of 131,000 tons of anhydrous hydrogen fluoride, which is mainly used as a supporting raw material for the production of fluorine refrigerants and fluorine foaming agents, thus forming an integrated advantage.
Third-generation refrigerants have begun a quota management period, and the company is expected to benefit from the upward trend in the industry. (1) Unlike second-generation refrigerants, which were replaceable in the early stages of reduction, fourth-generation refrigerants were unable to replace third-generation refrigerants on a large scale due to patent barriers and high costs. At the same time, costs were reversed in some varieties in the baseline year, and the supply and demand pattern improved markedly after entering the quota management period, and the price of third-generation refrigerants is expected to enter a continuous upward channel. (2) Downstream demand for third-generation refrigerants mainly depends on air conditioners and automobiles. Among them, demand for air conditioning has a certain correlation with the completed area of real estate. Future automobile demand growth is mainly due to growth in exports and new energy vehicles. According to estimates, there may be a domestic supply and demand gap in 2024 without conversion between types. (3) According to estimates, under the assumption that the prices of major refrigerant varieties will all rise by 0.5/1.0/1.5/2.0/2.5/3.0 million yuan, the company's performance has a flexible space of 86%/171%/257%/342%/428%/514% compared to '22.
Lay out fluorine-containing fine chemicals and fluoropolymers to extend the downstream industrial chain. The company's 6000t/a lithium hexafluorophosphate project is expected to be tested in the first quarter of '24, and the 5000t/a polyperfluoroethylene propylene and 5000t/a polyvinylidene fluoride projects are expected to enter trial production around December '24. After the project is put into operation, it is expected that the company will further enrich the company's product matrix and improve the integrated layout of the fluorochemical industry chain. At the same time, the company is expected to contribute 113 to 533 million yuan in revenue from 24-25.
We forecast that in 2023/2024/2025, the company will achieve operating income of 3,509 million/4.339 billion yuan/5.266 billion yuan, year-on-year, -26.45%/+23.65%/+21.37%, net profit to mother of 301 million/746 million/960 million yuan, or -38.08%/+148.20%/+28.63% year-on-year, corresponding EPS of 0.49/1.22/1.57 billion yuan. Considering that the company is a third-generation refrigerant leader and that the industry's prosperity is expected to continue to rise, the company was given 28 times PE in 2024, with a target price of 34.23 yuan/share, covering the first time, and giving it an “increase in weight” rating.
Risk warning
Raw material prices fluctuate; downstream demand falls short of expectations; industry competition intensifies; project construction progress falls short of expectations; and the specific implementation process of quota management policies may be flawed.