The company released its 2023 annual report. In 2023, the company achieved operating income of 2,277 million yuan, a year-on-year decrease of 31.23%, a year-on-year decrease of 37.05%, net profit after deducting 643 million yuan, a year-on-year decrease of 39.61%. Among them, Q4 achieved revenue of 526 million yuan, a decrease of 8.34% month-on-month, and net profit of 120 million yuan month-on-month, a year-on-month increase of 6.31%. (1) The company still showed high operating resilience at the bottom of the silane industry, and profits bottomed out in a single quarter; (2) The company plans to pay a cash dividend of 1 yuan per share in 2023, with a cash dividend ratio of 57.02%, an increase of 26.25 pcts compared to 2022, showing long-term investment value.
The silane economy bottomed out and picked up. The company operated steadily throughout the year, and production and sales increased steadily. Since 2023, due to multiple factors such as international monetary tightening and geopolitics, the global economy has been sluggish, and new production capacity has been released in the supply-side industry. As a result, the silane boom continued to decline in the first half of the year. Entering the third quarter, driven by improved demand for upstream silicon powder and terminals, silane prices bottomed out and rebounded. According to Baichuan Yingfu data, the average prices of Q4 aminosilane, epoxy silane, methacryloxysilane, and sulfur-containing silane in 2023 were 24 yuan/kg, 35 yuan/kg, 23 yuan/kg, and 17 yuan/kg, respectively, up 5%/21%/0%/8% from the average price of Q3. Judging from the scale of production and sales, the company's annual capacity utilization rate remained high. The new production capacity of the IPO project was successfully released, and 0.37 million tons of functional silane were produced, achieving annual silane production of 104,300 tons and 104,400 tons of silane, up 17.06% and 15.87% year-on-year respectively, showing high operational resilience.
Develop high-end silicon-based materials, and long-term growth can be expected. The company recently purchased patent rights for 4 invention patents from the Institute of Chemistry of the Chinese Academy of Sciences, “Borate Thickener for Additive Silicone Rubber and Its Preparation Method and Application”, “A Preparation Device and Method for Polysilazane”, and “A Room Temperature Curing Agent, Preparation Method and Application of High Temperature Resistant Silicone Materials”, which are expected to enhance the company's ability to prepare high-end functional silane products and further enrich the product line.
Adjust the profit forecast and maintain the “purchase” rating: The production capacity release of the company's functional silane coupling agent and intermediate project was smooth, and the cost control level of the trichlorosilane project was further improved. However, considering the impact of falling prices of silane products, we adjusted the profit forecast. The company's net profit to the mother for 2024-2026 was 7.94, 9.32, and 1,026 million yuan, respectively (originally 957 million yuan and 1,311 million yuan; additional 2026 net profit of 1,026 million yuan), corresponding PE was 11X, 10X, and 9X, maintaining the “purchase” rating.
Risk warning: The progress of the new construction project falls short of expectations; risk of falling demand