On March 26, the company released its 2023 annual report. It achieved annual revenue of 6.78 billion yuan, -17% year-on-year, and achieved net profit of 446 million yuan, or -49% year-on-year. Among them, Q4 achieved operating income of 1.84 billion yuan, +6% year-on-month, and realized net profit of 42 million yuan, -53% year-on-year and -47% month-on-month, and realized net profit deducted from mother of 55 million yuan, -3% year-on-year, and -2% month-on-month. Non-recurring gains and losses are mainly government grants.

Q4 PV production schedule weakens, EVA prices are under pressure, and supply and demand are expected to improve in 2024. The company produced 160,500 tons of EVA resin and sold 160,200 tons of EVA resin throughout the year, basically achieving full production and sales, with a year-on-year increase of 13%; the gross profit margin of the EVA business was 40.95%, and profitability remained high throughout the year. Q4 PV industry chain price drop, module demand weakens slightly, compounded by weakening demand in other sectors. EVA resin prices fell to a year-round low, putting pressure on the company's profitability. Q1 PV module production schedule increased significantly, driving demand for photovoltaic film and EVA. PV EVA prices rebounded from the bottom to 13,000 yuan/ton. Supported by demand, module production is expected to remain at a high level in April, and EVA prices and profits will continue to recover. With economic support, PV demand is expected to increase by about 30% in 2024, driving demand for PV EVA resin to continue to grow. However, only 250,000 tons of EVA energy will be added in 2024. Considering factors such as rising plant production, the price and profit of PV EVA resin is expected to recover in 2024.

Multiple sets of devices have been put into production one after another, and the reduction in core products+the release of new products contributed to the increase in performance. The company is actively promoting the construction of a new material platform, and several sets of devices will be put into operation by CCCC one after another:

The 90,000 tons/year VA unit was put into operation in January 24, which is expected to significantly reduce EVA production costs; 20,000 tons/year UHMWPE, 10,000 tons/year PLA, 10,000 tons/year electronic special gas, and 4,000 tons/year lithium battery additives are scheduled to be put into operation in 2024. After commissioning, they will increase the company's high-profit product categories, enhance the company's profitability, and support continued growth in performance.

Lay out POE and improve the new material platform to comprehensively enhance the competitiveness of photovoltaic materials. In order to enhance competitiveness in the field of photovoltaic materials, the company plans to build a 300,000 tons/year POE project. The first phase of the 100,000 ton unit is expected to be completed and put into operation in 2025; in addition, the company's 200,000 ton EVA plant is expected to be completed and put into operation in 2025. In 2025, the company will have a production capacity of 350,000 tons of EVA and 100,000 tons of POE, comprehensively enhancing competitiveness in the photovoltaic field.

According to our latest forecast on product prices, the company's 24-25 profit forecast was lowered to 5.5 (-47%) and 6.7 (-22%) yuan, adding a 26-year profit forecast of 1.01 billion yuan; considering the growth brought about by the company's new materials platform, the “buy” rating was maintained.

Product prices fell short of expectations; construction of expansion projects and development of new products fell short of expectations.