Aggregate Shunshun released its 2023 annual report. In 2023, the company achieved operating income of 6.018 billion yuan, a year-on-year decrease of 0.31%; realized deducted non-net profit of 192 million yuan, a year-on-year decrease of 18.63%.
The year-on-year decline in net profit due to the year-on-year decline in R&D expenses was mainly due to the increase in R&D expenses of Polymerization Shunluhua and Changde Fushun in 2023. 1) In terms of operating revenue by product, the company's cumulative revenue of nylon slice products fell 0.30% to 6.013 billion yuan in 2023. 2) Looking at gross margin by product, the gross margin of nylon slice products increased 0.45 percentage points year-on-year to 6.70% in 2023. 3) Looking at sales by product, nylon slice sales in 2023 were 477,800 tons, an increase of 6.04% over the previous year. 4) The price of nylon slice products decreased by 5.98% to 12,600 yuan/ton in 2023. 5) Management, R&D, and financial expenses for the full year of 2023 changed by 0.11, 0.78, and 0.34 percentage points to 0.62%, 2.63%, and -0.79%, respectively, and the total three fees increased 1.24 percentage points to 2.65%.
The company actively promotes the construction of new investment projects, develops new products, and optimizes the product structure. 1) The “R&D Center Construction Project” is progressing in an orderly manner. The nylon 66, nylon 66 and nylon 6 copolymer products developed have been put on the market and have been recognized by customers. 2) The “New Material Project with an Annual Output of 180,000 Tons of Polyamide 6” is a convertible bond raising project. Production equipment has been installed, reached the intended state of use, and trial operation was carried out, and production capacity was gradually released throughout the year. 3) Promote the construction of expansion projects, including the first and second phases of the “180,000 tons/year polyamide 6 slice project” of polymerization Shunluhua; the new nylon material project with an annual output of 124,000 tons by the Polymerization Division; and preparations for the “80,000 tons/year nylon new material (nylon 66) project” in Shandong.
The company has advantages such as production equipment, R&D team, and flexible production. 1) The company uses nylon 6 slice manufacturing equipment and technology made in Germany, and signed a supply contract for supporting polymerization equipment with Beijing Sanlian to build an advanced production equipment system. 2) The company has set up a special technology research and development center. The core technicians have rich industry experience and excellent technology, can master the production and processing technology know-how of imported equipment, and achieve high standard product production with low operating costs. 3) The entire R&D team of the company has many years of experience in R&D and production of nylon 6 polymerization processes to provide technical support for the development of new products. 4) The company integrates flexible factors into all aspects of factory production design: during the planning and commissioning stage, the main creators are deeply involved in production system design, and the flexible production concept is integrated into it.
Profit forecasting and investment ratings. We expect the company's EPS in 2024-2026 to be 0.80, 1.00, and 1.21 yuan respectively. Referring to the valuation of comparable companies in the same industry, we believe that a reasonable valuation range is 13-16 times PE in 2024, and the corresponding reasonable value range is 10.40-12.80 yuan, maintaining a “superior to market” rating.
Risk warning: macroeconomic downturn; product prices fluctuate greatly.