occurrences
The company released its 2023 annual report. During the reporting period, the company achieved operating income of 28.105 billion yuan, a year-on-year decrease of 7.28%; achieved net profit of 1,379 billion yuan, a year-on-year decrease of 76.44%; 2023Q4 achieved operating income of 6.178 billion yuan, an increase of 13.27% and a year-on-year decrease of 25.73%; and realized net profit of 445 million yuan, a year-on-year decrease of 52.69% and a year-on-year increase of 36.85%.
The agrochemical and silicone product boom declined, and the annual performance declined year on year.
According to the company's operating data disclosure, the average sales price of the company's specialty chemicals, glyphosate series products, fertilizer and silicone series products in 2023 was 11186.47 yuan/ton, 24990.34 yuan/ton, 2909.26 yuan/ton, and 11446.03 yuan/ton, respectively, -28.51%, -55.33%, -14.65%, and -38.58%, respectively. Prices of the company's main products all declined to a certain extent. Prices of phosphate fertilizer were adjusted in 2023Q2, and prices were gradually recovered; glyphosate was affected by inventory pressure throughout the year. Although prices rose briefly in June-July 2023, overall demand was weak, falling to 26,000 yuan/ton at the end of December 2023; silicone was affected by weak downstream demand, compounded by strong supply-side pressure. Prices showed a downward trend throughout the year; in terms of specialty chemicals, the price of electronic grade phosphoric acid and electronic grade sulfuric acid declined. Chemical prices are relatively stable.
Cost control is relatively good, and R&D rates remain high.
In 2023, the company's sales, management, finance and R&D rates were 1.29%, 1.67%, 1.12%, and 3.97%, respectively, +0.16pct, +0.08pct, +0.08pct, and -0.1pct, respectively. Various rates remained at a reasonable level throughout the year. Among them, R&D investment remained at a high level, with a total investment of 1,117 billion yuan throughout the year, demonstrating the company's support for innovative projects and scientific research talents.
Key projects have been put into operation one after another, and the new materials sector shows potential for growth.
In 2023, the company actively deployed electronic chemicals, new silicone materials and lithium battery materials. Projects such as 30,000 tons/year of electronic-grade phosphoric acid, 20,000 tons/year of electron-grade etching solution, 50,000 tons/year photovoltaic adhesive, 300,000 tons/year iron phosphate (phase I), 550 tons/year microcapsules, and 5000 m3/year aerogel felt were put into operation. While consolidating the advantages of the original products, the company actively develops high-value-added deep-processing materials, thereby promoting the company's transformation and upgrading in the direction of new materials.
Investment advice:
We expect the company's 2024-2026 net profit to be 18.73/23.4/2,542 billion yuan, EPS 1.70/2.12/2.31 yuan, respectively, and the corresponding PE is 12/10/9 times, respectively. Considering that the company is a leading domestic phosphorous chemical enterprise, rich in phosphate resources, there is plenty of room for future growth as new material projects continue to be implemented, and maintains a “buy” rating.
Risk warning: Phosphorus chemical products declined, and the commissioning of new projects fell short of expectations.