Introduction to this report:
The company's 23Q4 performance is under pressure in the short term, but Q1 is expected to perform well. Considering the company's strong growth, it maintains an increase in holdings rating.
Key points of investment:
Maintain an “Overweight” rating. Recently, the price of the company's products has declined. The 24-25 EPS was reduced to 2.18/2.67 yuan (originally 2.83/3.26 yuan), and the new 26-year EPS was 2.93 yuan. Referring to comparable company valuations and company growth, the company was given 15 times PE in 24 years, and the target price was lowered to 32.76 yuan (originally 40.87 yuan).
23Q4 results were under pressure. 23 Achieved full-year operating income of 27.26 billion yuan (-9.87% YoY), net profit attributable to mother of 3.576 billion yuan (YoY -43.14%), net profit of 3.70 billion yuan (YoY -42.28%, YoY -42.34%), of which Q4 achieved revenue of 7.91 billion yuan in a single quarter (+9.36% YoY, +13.26% YoY), net profit to mother of 650 million yuan (-14.09% YoY, -46.73% YoY), and net profit of 80 million yuan (YoY -14.514.2% YoY) , -33.94% month-on-month). In terms of sales volume, the company's sales situation was relatively good. Q4 sold a total of 1.97 million tons of products, +30.38% year over year, and +16.93% month over month. We believe that the reason for the month-on-month decline in Q4 results is the anticipated high level of non-operating expenses due to debt.
Total profit is expected to increase significantly in 24Q1. Hualu Hengsheng is the Group's main source of profit. According to the Group's official account, the Group's revenue increased 20% year on year, reaching a record high, and total profit increased 38% year on year, the third highest in history. Therefore, we believe that the growth rate of Hualu Hengsheng's total profit is expected to be relatively close to the Group's growth rate, helping to achieve higher performance growth.
The first phase of Jingzhou was put into operation, and the second phase started. The first phase of the company's Jingzhou base project was successfully put into operation in '23, and construction of the second phase of the project has now begun. The integration project is 23%, the melamine resin monomer material project is progressing 49%, and the optimization of melamine resin monomer materials and products has improved the progress of the project by 37%.
Risk warning: The risk of projects under construction falling short of expectations, and the risk of safety accidents occurring.