Incident: The company released its 2023 annual report, which achieved net profit of 2,277 billion yuan, and realized net profit of 655 million yuan in 23 years, or -37.1% year-on-year, after deducting non-net profit of 643 million yuan, or -39.6% year-on-year; of these, 23Q4 achieved revenue of 526 million yuan, or -19.0%/-8.3% YoY, net profit to mother of 120 million yuan, 42.6%/-24.8% YoY, net profit of 150 million yuan YoY, -15.3%/+6.3% YoY.
Q4 The price of silane bottomed out and rebounded, and profitability remained high. In 23 years, the company has been actively developing customers. The company has successfully developed 169 new customers that have reached the mass sales scale, including 24 overseas customers. Sales of functional silane increased further. The annual sales volume of finished functional silane products was 104,400 tons, up 15.9% year on year, and the production and sales rate was 100.1%; of these, 23Q4 sales were 25,900 tons, -11% month-on-month, mainly affected by maintenance. However, prices were greatly affected by the industry. The average sales price of the company's finished functional silane products in '23 was 21,400 yuan, or -41.78%. Among them, the price of 24Q4 silane bottomed out and rebounded. It was estimated that the average sales price of 23Q4 functional silane finished products was 19,900 yuan, +2.0% month-on-month. The company's 23Q4 gross margin remained high at 41.20%, +1.65/7.73 pct month-on-month, but due to hedging losses, the Q4 net margin was 22.84%, or -9.41/-5.01pct month-on-month.
The functional silane coupling agent and intermediate construction project has been partially put into operation. By the end of 23, the fund-raising project had built an annual production capacity of 15,000 tons of functional silane and 30,000 tons of functional silane intermediates, and produced 0.37,000 tons of functional silane and 22,300 tons of silane intermediates. In February '24, the company decided to invest the aerogel project in the first phase of the Silicon-based New Material Green Cycle Industrial Park project. The project plans to produce 60,000 tons of silicon trichlorosilane and 6,000 tons of silicon tetrachloride per year, which can mitigate the current situation where the supply of functional silane cannot fully meet customer needs due to insufficient production capacity of silicon trichlorosilane. In March, the company announced the purchase of 4 invention patents from the Chinese Academy of Sciences, enabling the company to master functional silane technology in high-end fields such as boron-containing additives and high-temperature resistant additives, and the product line is expected to be further enriched.
Investment advice: The price of silane products fell more than expected. We lowered our 24-26 net profit to mother to 6.32/7.45/893 million yuan, corresponding to current PE of 14.4/12.2/10.2x, respectively. The company maintains high profitability at the bottom of the industry. We are optimistic about the company's development potential for a long time and maintain a “buy” rating.
Risk warning: Production capacity release falls short of expectations, raw material prices fluctuate, and downstream demand falls short of expectations.