Q4 The month-on-month decline in chemical prosperity dragged down the company's performance. The new base was successfully put into operation, and the “buy” rating was maintained
In 2023, the company achieved revenue of 27.260 billion yuan, -9.87% year-on-year; net profit to mother was 3,576 billion yuan, or -43.14% year-on-year. Q4 The company achieved revenue of 7.914 billion yuan, +13.26% month-on-month; realized net profit of 649 million yuan, or -46.73% month-on-month; and realized deducted non-net profit of 800 million yuan. In 2023, due to shrinking demand, supply shocks, and weakening expectations, etc., the chemical boom declined, and the company's Jingzhou base successfully put into operation, bucked the trend and expanded to create a new situation offsite. Since 2022, the production capacity of the company's main product industry has expanded dramatically, and the contradiction between industry supply and demand is prominent. We have lowered the company's profit forecasts for 2024-2025 and added 2026. The estimated net profit to mother is 45.35 (-15.39), 48.86 (-17.96), and 5.272 billion yuan, respectively. EPS is 2.14 (-0.72), 2.30 (-0.85), and 2.48 yuan/share, respectively. The current stock price corresponds to PE 12.4, 11.5, and 10.6 times, respectively. In the future, as the products at the Jingzhou base gradually become richer, I am optimistic that the company's costs will continue to decline and future growth, and maintain a “buy” rating.
In Q4 2023, coal prices fell and product prices rose, and price spreads for most products improved month-on-month
According to Wind data and our estimates, in Q4 2023, the average price of thermal coal (5,500 cal) was 965 yuan/ton, up 15.8% from the average value of 833 yuan/ton in Q3; the average price of pure benzene was 7,854 yuan/ton, up 9.42% month-on-month; the average price of urea, DMC, adipic acid and other product industries was 2,437, 3,902, 9,119 yuan/ton, respectively; the average price difference was +3.81%, -12.86%, and -0.01% month-on-month, respectively; the average price difference was -7.79% and -23.1% month-on-month compared to Q3, respectively 22%, - 26.61%
Q4 is the traditional low season for chemicals. Combined with rising costs of raw materials such as coal and benzene, the price differences of the company's many products have narrowed month-on-month, hampering the company's performance.
The company is an energy efficiency leader in methanol and ammonia synthesis, and is expected to stand out from the fierce industry competition. According to Lightning News reports, the company also received the benchmark title of “energy efficiency leader” in the three synthetic ammonia, methanol, and acetic acid industries in 2023, and it is also the 11th time that it has received this honorary title. According to the “Benchmark Levels and Benchmark Levels for Energy Efficiency in Key Industrial Areas (2023 Edition)” issued by the National Development and Reform Commission, in 2025-2026, the energy efficiency transformation of coal-based methanol, ethylene glycol, synthetic ammonia, urea and other products below the benchmark level will be upgraded to above the benchmark level, and projects that cannot be completed on schedule will be eliminated. At that time, the supply-side pressure on the industry for these products is expected to slow down. As an energy efficiency leader in the ammonia alcohol industry, the company may benefit from a reduction in industry supply pressure.
Risk warning: Project construction progress falls short of expectations, sharp drop in product prices, macroeconomic downturn, etc.