The performance was in line with expectations. Q4 net profit continued to improve month-on-month. The company's profitability resilience showed that the company released its 2023 annual report, achieving revenue of 28.105 billion yuan, -7.28% year over year; net profit to mother of 1,379 billion yuan, -76.44% year over year. Among them, Q4 achieved revenue of 6.178 billion yuan, +13.27% year-on-year and -25.73% month-on-month; net profit to mother of 445 million yuan, -52.67% year-on-year and +36.85% month-on-month. Q4 net profit to mother continued to improve month-on-month. The performance was in line with expectations, and a proposed discovery dividend of 0.6 yuan/share (tax included). Based on the company's main product boom and the progress of projects under construction, we maintain 2024-2025 and add 2026 profit forecasts. The company's net profit for 2024-2026 is 17.15, 21.95, and 2,654 billion yuan, respectively, and EPS is 1.55, 1.99, and 2.41 yuan/share, respectively. The current stock price is 12.7, 9.9, and 8.2 times PE for 2024-2026. Traditional cycle businesses such as fertilizer, silicone DMC, and glyphosate dragged down the company's 2023 performance. The company insisted on R&D and innovation, and the diversified product structure helped slowly recover profits. We are optimistic that the company's conversion of old and new kinetic energy will accelerate towards a world-class fine chemical enterprise and maintain a “buy” rating.
The gross margin of cyclical businesses such as fertilizer, silicone, and glyphosate declined sharply, and the company's profit was under pressure (1) By business: in 2023, revenue from fertilizer, silicone, glyphosate, mine harvesting, and specialty chemicals was 36.1, 21.4, 42.8, 16.0, and 5.03 billion yuan, respectively, +4.59%, -48.13%, -50.60%, +87.36%, and -19.26%; gross margins were 8.7%, 4.33%, 31.01%, 73.74%, 20.75%, respectively. 10.38, -13.16, -27.08, -0.19, -17.50 pcts, gross margin of fertilizer, silicone, glyphosate and specialty chemicals dropped sharply on the company's overall profitability. In 2023, the company's gross sales margin and net margin were 16.17% and 4.93%, respectively, -19.44 and -17.49pcts, respectively; of these, Q4 sales gross margin and net margin were 26.89%, 6.61%, +14.28 and +2.43pcts, respectively. . (2) Looking at production and sales: In 2023, the sales volume of fertilizer, silicone series, glyphosate series, and specialty chemicals was 123.97, 18.73, 17.14, and 449,400 tons, respectively, +22.55%, -15.55%, +10.58%, and +12.94% year-on-year; prices without tax were 2,909, 11,446, 24,990, 11,186 yuan/ton, respectively, -14.65%, -38.58%, -55.33%, and -28.51% year-on-year respectively. According to the company's business plan, it will strive to achieve revenue of 32 billion yuan in 2024. We are optimistic that the company will play a central supporting role in scientific and technological innovation, build a modern green industry system, and accelerate the achievement of the “100 billion prosperity, world-class” goal.
Risk warning: Fluctuations in raw material and product prices, project progress falling short of expectations, safety and environmental risks, etc.