occurrences

On March 25, the company disclosed its 2023 annual report. In 2023, the company achieved operating income of 1,835 million yuan, +19.20% year over year; realized net profit of 320 million yuan, +35.73% year over year; realized net profit without return to mother of 309 million yuan, +39.09% year over year. At the end of 2023, the total assets of the company were 7.253 billion yuan, +92.73% year on year; net assets attributable to shareholders of listed companies were 5.730 billion yuan, +145.46% year over year.

Key points of investment

Electronic gas is being supplied one after another, and the increase in helium sales has driven a steady increase in performance. In '23, the company achieved revenue of 1,835 billion yuan, +19.20%. Among them, electronic bulk gas/general industrial gas achieved revenue of 12.11/515 billion yuan, +25.14%/15.60% year-on-year, and the company's operating costs were 1,192 billion yuan, +25.41% year-on-year. The company's electronic bulk gas/general industrial gas achieved gross profit margin of 39.10%/24.35%, a year-on-year decrease of 5.42pct/5.05pct, mainly during the 23-year reporting period, the company obtained Xi'an Xinxin, Electronic bulk gas projects such as Guangzhou Zengxin, Guangzhou Guangxin, Shenzhen Saifa, and Beijing Xilex are also actively promoting the continuous construction of electronic bulk gas stations for various key projects such as the Hefei Comprehensive Insurance Zone, Huaxing Optoelectronics T9, Hefei Changxin Phase II, Beijing Changxin Power Collection, and Shanghai Dingtai Jiangxin. As electronic bulk gas stations are commercialized one after another, the company's revenue has grown steadily, and operating costs have increased accordingly. Meanwhile, after the 3.0/4.0 shortage of helium, with the advent of Russian gas sources, there was an oversupply situation in the domestic market. Currently, it is in the bottom range. The company has continued to increase its helium market development efforts in 23 years. Helium business sales have maintained a growth trend, and helium revenue and costs have increased.

The core advantages of electronics continue to be strengthened, and the 24-year plan is to complete an investment of 1.2 billion yuan and is poised to grow. According to Zhuochuang News data, China's electronic bulk gas market is expected to reach 10.3 billion yuan in 23. Based on the company's electronic bulk gas sales revenue, the company's electronic bulk gas market share is 11.75%. The gas supply cycle for a single on-site gas production project in the electronic bulk gas industry usually lasts 15 years. Customers rarely change suppliers during this period, so there is basically no new demand in the stock market. Winning bids for on-site gas production projects where customers build new production lines can more directly reflect changes in the competitive landscape of the industry. In 23 years, the company won the bid for 24.6% of production capacity in the domestic integrated circuit manufacturing and semiconductor display fields, ranking second. In the field of electronic bulk gases, the company has formed a “1+3” competitive pattern with the three major foreign-funded gas companies of Linde Gas, Liquefied Air, and Air Chemical. In recent years, the company has relied on leading technology and engineering capabilities to continuously acquire new projects, and has basically maintained an effective investment of more than 1 billion yuan per year. In order to promote the implementation of related projects such as electronic bulk/helium/electronic special gas, the company plans to complete an investment of 1,224 billion yuan in 24 to help the company achieve high-quality development.

Increased helium sales hedged price risks and entered helium manufacturers with a 5% market share in the global market share.

Helium is an indispensable key material for the electronic semiconductor industry. Global helium resources are almost entirely owned by a few countries such as the United States and Qatar. Foreign-funded gas companies have taken control of the global helium supply with their pioneering advantage in helium resources and supply chain technology. Starting from serving the country's major strategic needs, the company has formed autonomous and controllable technical capabilities around the complete helium supply chain, becoming the first domestic-owned gas company to enter the global helium supply chain.

The company continued to increase its helium market development efforts in 23. Although the 23Q1 and 23Q2 helium market prices began to gradually fall, 23Q3 is still in the lower range, facing a cycle of changes in helium prices. On the one hand, with the completion and operation of helium production bases in Guangzhou and Wuhan, the company is developing new Changxie gas sources and vigorously developing high-quality helium terminal customers at home and abroad to hedge the risk of price fluctuations; on the other hand, the company continues to strengthen its transportation capacity. It is expected to reach more than 70 ISO tanks by the end of 24 and reach 100 ISO tanks in '25 Power. According to estimates of the turnover frequency of each liquid helium cold box about 3.5 times per year, the company is expected to have a helium capacity level of about 4.5 million m3/year in 24, and reach a capacity of 8 to 9 million m3/year in 25, ensuring that the company can become a helium manufacturer with a 5% market share in the world.

Strategically lay out the electronic specialty gas industry to create a new business growth pole. Providing comprehensive gas services to the domestic electronic semiconductor industry has always been the company's industrial development goal. The company will rely on the customer base established for the development of the electronic bulk gas business to accelerate the strategic layout of the electronic special gas business. Among them, the Hubei electronic grade C4F6 project and the Shanghai Chemical Industry Park electronic grade HCl project have fully entered the construction stage. According to QYResearch, the global C4F6 market sales in 2023 are about 1.9 billion yuan, and it is expected to reach 5.9 billion yuan in 2030. Global core manufacturers include Linde Gas, Kanto Electrochemical, French Liquid Air, and Sun Nissan, etc., and the global CR5 is close to 60%. As the world's largest C4F6 production area, China accounts for about 45% of the market share. C4F6 is mainly used in 3D NAND etching, etc. In the future, as demand for advanced processes expands and the demand for localized replacement, C4F6 is expected to contribute to increased performance. According to the New Thinking Industry Research Center, the domestic electronic grade HCl gas market demand reached 8115.2 tons in '21. In the future, against the backdrop of a continuous rise in the development trend of large integrated circuits, high integration, and high integrity, the domestic electronic grade HCl gas industry will continue to transform and upgrade in the direction of high-end, and the industry has broad room for development. In the future, the company will continue to lay out electronic specialty gas services in strategic emerging industry clusters, enhance the company's comprehensive service capabilities, and create new profit growth points.

Investment advice

We expect the company to achieve revenue of 23/29/3.7 billion yuan in 2024/2025/2026, and net profit to mother of 4.0/5.4/71 billion yuan respectively. The current stock price corresponding to 2024-2026 PE is 32 times, 24 times, and 18 times, respectively, maintaining a “buy” rating.

Risk warning

The progress of foreign investment falls short of expectations, the risk of technological upgrading and iteration, and the risk of market competition.