In 2023, the company achieved operating income of 27.26 billion yuan, a year-on-year decrease of 9.87%, and net profit to mother of 3,576 billion yuan, a year-on-year decrease of 43.14%. Among them, the fourth quarter achieved revenue of 7.914 billion yuan, a year-on-year increase of 9.36%, a month-on-month increase of 13.26%, and realized net profit of 649 million yuan, a year-on-year decrease of 14.09% and a decrease of 46.73% month-on-month. Affected by the decline in industry sentiment, the company's performance is under pressure in the short term. It is optimistic about future profit recovery and the potential development of the Jingzhou base, and maintains a purchase rating.
Key points to support ratings
Industry sentiment was under pressure in the short term, and product sales bucked the trend. In 2023, due to the triple pressure of shrinking demand, supply shocks, and weakening expectations, product prices fluctuated at a low level, and industry sentiment declined. The company's gross sales margin was 20.85%, down 8.09 pcts year on year. Among them, gross sales margin for the fourth quarter was 17.77%, down 0.91 pct year on year. The company achieved a contrarian increase in total product sales through commissioning of new projects and technical reform and capacity expansion. In 2023, the new energy materials/fertiliser/organic amine/acetic acid sector achieved sales volume of 217.91/325.97/52.16/715,400 tons, respectively, +20.20%/+14.89%/+8.80%/+24.20%; the average sales price was 7101.80/1741.30/ 5128.16/2868.23 yuan/ton, a year-on-year decrease of 12.14%/10.47%/58.99%/58.99%/ 21.57%; achieved revenue of 154.76/56.76/26.75/2.052 billion yuan, +5.61%/+2.86%/-55.38% /- .59% year on year; gross margin was 17.24%/35.07%/12.87%/20.95%, +1.93pct/-44.12pct/-4.29pct/-10.02 pct, respectively. In addition, the company accrued device operating compensation and technical usage fees based on the lawsuit settlement, and amortized 154 million yuan in 2023. In the future, as industry sentiment recovers, the company's profitability is expected to improve.
The first phase of the Jingzhou base was put into operation, increasing the room for growth. The first phase of the Jingzhou base was put into operation in 2023, adding 1 million tons of urea, 1 million tons of acetic acid, 150,000 tons of dimethylformamide (DMF), and 150,000 tons of mixed methylamine. At the same time, the high-end solvent project was successfully put into operation. The company has an annual production capacity of 600,000 tons of dimethyl carbonate (including 300,000 tons of sales), 300,000 tons of methylethyl carbonate, and 50,000 tons of diethyl carbonate. In addition, the company's second phase of projects is still in progress, including 200,000 tons of BDO, 160,000 tons of NMP and 30,000 tons of PBAT biodegradable materials integration projects, 520,000 tons of molten urea, 100,000 tons of acetic anhydride, melamine resin monomer materials, 40,000 tons of nylon 66, 200,000 tons of adipic acid, and 42,000 tons of hexanediamine. In the future, with the release of new production capacity at the Jingzhou base and the steady progress of the second phase of construction, the company's growth space is expected to open up again.
Cost reduction continues to advance, and the low cost advantage has been consolidated. The company has stepped up technical reform efforts to increase the production capacity of some products, strengthen energy saving and consumption reduction, increase the comprehensive utilization of resources, and improve carbon reduction capabilities. In 2023, the company successfully passed the Ministry of Industry and Information Technology's industrial energy efficiency inspection and the energy consumption verification of the “two highest” industries in Shandong Province; it was once again awarded the national “leader” energy efficiency benchmark enterprise in the ammonia, methanol and acetic acid industries. By digging deeper into the potential of devices and systems and strengthening lean management, the company's low cost advantage has been clearly consolidated.
valuations
Industry sentiment is declining, performance is under pressure in the short term, and the company's profit forecast is expected to be 2.16 yuan, 2.71 yuan, and 3.07 yuan respectively in 2024-2026. The PE corresponding to the current stock price is 12.5 times, 10.0 times, and 8.8 times. The construction of the Jingzhou base is progressing in an orderly manner. We are optimistic about the company's long-term development and maintain the purchase rating.
The main risks faced by ratings
The macroeconomic situation has changed; the company's new projects have fallen short of expectations; the prices of fertilizer products have dropped sharply.