Core views:
The company released its 2023 annual report. In 2023, the company achieved total revenue of 6.018 billion yuan, a year-on-year decrease of 0.31%; net profit to mother was 197 million yuan, a year-on-year increase of 18.78%; gross margin/net margin/ROE (diluted) was 6.70%/3.61%/11.50%, respectively, +0.44/-0.37/ -3.82pct. The 23Q4 company achieved revenue of 1,641 billion yuan, a year-on-year increase of 34.67%; net profit to mother was 46.55 million yuan, an increase of 22.5% year-on-year and a year-on-month decrease of 6.73%; it plans to distribute a cash dividend of 2.85 yuan for every 10 shares.
The Tengzhou project continued to contribute to the increase in production capacity, and production and sales increased significantly year-on-year in 23Q4. According to the company's operating data announcement, 23Q4's nylon slice production volume was 126,500 tons, +253,000 tons year on month; sales volume was 126,000 tons, +27,500 tons year on month, and -0.07 million tons month on month; nylon slices/caprolactam prices were +3.07%/+0.24% month-on-month, respectively. On September 19, the company announced that it obtained assets related to Hunan Jinbo through an auction of 79.33 million yuan. According to the company's financial report, the first phase of 180,000 tons at the Tengzhou plant of Juhui Shunlu Chemical Co., Ltd. reached production in December '22, April '23, and June '23, respectively.
New projects go hand in hand to ensure long-term growth. As of 23Q4, the company's ongoing construction project was 267 million yuan. According to the company's 23-year financial report, the company's production capacity and market share will continue to increase as new projects such as the new nylon material project (the first phase of 124,000 tons is expected to be put into operation in 24 years; the first phase of 80,000 tons is expected to be put into operation in 25 years, the project progress is 6%, a total of 500,000 tons), and the Polymerization Shunluhua PA6 project (phase II 220,000 tons is expected to be put into operation in 26 years, 30% of the project progress).
Profit forecasting and investment advice. The company's EPS is expected to be 0.87/1.43/1.78 yuan/share in 24-26, respectively. Considering the company's low product boom and future product growth, maintain a reasonable value of 13.78 yuan/share, corresponding to the company's 24-year performance 15.81 times PE valuation, and maintain a “buy” rating.
Risk warning. Demand for nylon declined; raw material prices fluctuated sharply; production progress fell short of expectations; production safety incidents.