Net profit for 23 years was 3.58 billion yuan/YoY -43%, maintaining the “buy” rating. Hualu Hengsheng released its 23rd annual report on March 29, achieving annual revenue of 27.3 billion yuan, yoy -9.9%, net profit to mother of 3.58 billion yuan, yoy -43%; of these, 23Q4 net profit to mother was 650 million yuan, -14% YoY /-47% month-on-month. The company plans to pay a cash dividend of $0.60 (tax included) per share. We expect the company to have a net profit of 45/53.62 billion yuan in 24-26 years, corresponding to EPS of 2.13/2.48/2.90 yuan. Combined with the company's 24-year Wind consensus average of 12xPE, considering the growth potential of new projects and future new materials to enhance product competitiveness, we will give it a 24-year 16xPE with a target price of 34.08 yuan to maintain the “buy” rating.
The boom in most main products was under pressure, and annual profits declined year-on-year
The annual sales volume of the new materials sector yoy +20% to 2.18 million tons, revenue yoy +6% to 15.5 billion yuan, gross margin yoy+1.9pct to 17.2%; the organic amine sector sold yoy +9% to 520,000 tons, and the release of additional production capacity in the industry caused the product boom to decline. The sector's revenue yoy was -55% to 2.7 billion yuan, and gross margin yoy-44pct to 13%; fertilizer sales yoy +15% to 3.26 million tons, revenue yoy +3% to 5.7 billion yuan, due to a year-on-year decline in urea and other prices - 4.3 pct to 35%; sales volume of acetic acid and derivatives yoy +24% to 720,000 tons, revenue yoy -3% to 2.1 billion yuan, gross margin yoy-10pct to 21%.
The annual comprehensive gross margin was -8.1pct to 20.9% year-on-year, and the period expense ratio yoy+0.6pct was 3.8%.
Product prices are expected to gradually recover. According to Baichuan Yingfu, the prices of urea/DMF/adipic acid/acetic acid/octanol/DMC were 0.21/0.48/0.92/0.30/1.0/0.47 million yuan/ton respectively, compared to -7%/-3%/-1%/-24%/0% at the beginning of the year. Prices of most products are still relatively low in the past 5 years. In the future, along with the recovery in demand and the supply pattern under low prices, the product boom is expected to gradually recover; in the future, along with demand recovery and low prices, the product boom is expected to gradually recover; in terms of raw materials, coal, power, and coal anthracite The reference price is 690/1002 yuan/ton. Compared with -11%/-8% at the beginning of the year, we expect an improvement on the cost side. At the end of 23, the company's construction project was 3.2 billion yuan. In the future, along with new production capacity such as the Jingzhou base, and the expansion of categories such as new nylon materials and new energy materials, it is expected to support a new round of high-quality growth for the company.
Risk warning: raw material prices fluctuate greatly; production of new projects falls short of expectations; downstream demand falls short of expectations.