Introduction to this report:
The company's Q1 performance was in line with expectations. The Alashan project drove the company's continued growth and maintained an increase in holdings rating.
Key points of investment:
Maintain an “Overweight” rating. The company's 24Q1 performance was in line with expectations, maintaining the company's 24-25 year EPS of 0.75, 0.88, and 0.97 yuan for 26 years, respectively. Referring to comparable companies, the PE valuation was given 11.44 times in 24 years, and the target price was raised to 8.55 yuan (originally 6.73 yuan).
The company's 23Q4 deducted non-performance year-on-month growth was impressive. The company achieved total revenue of 12.044 billion yuan in 2023, +9.62% year on year; net profit due to mother was 1,410 billion yuan, -46.99% year on year; net profit after deducting non-return to mother was 2,414 billion yuan, -9.40% year on year. Among them, Q4 revenue was 4.06 billion yuan, +52.18% YoY net profit -0.96 million yuan, -130.46% YoY, -121.14% month-on-month; net profit without non-return to mother was 876 million yuan, +157.10% YoY, +93.42% month-on-month. On a month-on-month basis, the increase in the company's Q4 net profit deducted from the mother was mainly due to the commissioning of the Alashan project. The month-on-month decline in Q4 net profit was mainly affected by the estimated liabilities accruing from the company's shareholding subsidiary lawsuits.
The company's 24Q1 results were in line with expectations. The company achieved revenue of 3.28 billion yuan in the first quarter of 2024, +31.03% year on year; net profit to mother of 569 million yuan, -12.70% year on year; net profit after deducting non-return to mother was 568 million yuan, -13.03% year over year. The year-on-year decline in net profit was mainly due to the decline in soda ash prices compounded by a decline in coal revenue. According to Baichuan Yingfu statistics, the average price of lightweight soda ash in 24Q1 was 2,138 yuan/ton, -21.90% year-on-year and -16.74% month-on-month. Looking forward to the future, the company is expected to make up the price with volume.
Resources are king, low-cost expansion, and worry-free medium- to long-term growth. The first phase of the company's Alashan natural alkali project plans 5 million tons/year of soda ash and 400,000 tons/year of baking soda, and the test run of the fourth production line continues. In addition, the second phase of the Alashan Natural Alkali Project has begun, with plans to build 2.8 million tons/year of soda ash and 400,000 tons/year of baking soda.
Risk warning: Projects under construction fell short of expectations, and demand for glass fell sharply.