The company released its 2023 annual report. The company achieved annual revenue of 466 million yuan (yoy +16.11%), net profit of 125 million yuan (yoy +37.24%), net profit of 112 million yuan (yoy +31.38%), of which Q4 achieved revenue of 115 million yuan (yoy +8.26%, qoq -15.76%) and net profit of 35 million yuan (yoy +55.72%, qoq +0.49%), net profit of non-return to mother of 0.32 million yuan (yoy+ 54.11%, qoq +3.54%), the company actively promoted the iterative upgrading of products such as matting agents, and gradually entered the fields of photovoltaics, petrochemical plastics, anti-rust pigments, etc., and maintained impressive growth throughout the year.
Product structure upgrades and falling raw material prices have driven the new nano materials business to maintain impressive growth.
(1) Prices of sodium silicate and concentrated sulfuric acid, the main raw materials fell year on year in 2023. According to the company's procurement data, the average purchase price in the second half of 2023 decreased by 14%, 31% to 1,721 yuan/ton, and 355 yuan/ton respectively; (2) The company actively promoted the iterative upgrading of products such as matting agents, adsorbents, etc., and the marketing of high-end products such as openers and anti-rust pigments, which led to an increase in the added value of the company's new nano material products and a steady increase in production and sales volume. The company's gross sales margin increased by 3.23 pct to 41.10% year on year, and sales volume of new nanomaterials increased 18 year-on-year % to 22,300 tons.
Focusing on the new nano materials business, the double base immediately contributed to the increase. By the end of 2023, the company has a production capacity of 14,000 tons of nano silicon dioxide and 10,000 tons of nano alumina production capacity. Among the projects under construction, the Anhui base is expected to be put into operation in May 2024. The Hunan base will add 20,000 tons of ultrafine silica aerogel series products a year and is expected to be put into operation in August 2024. The construction of the second production base, Anhui Ling Wei, will help the company to support customers in East China nearby, break through existing production capacity bottlenecks and increase market share. In addition to the construction of the Anhui base, the company plans 2,000 tons of nano alumina and 26,000 tons of silicon dioxide for electronic materials at Lengshuijiang SanA. The dual sites plan a total production capacity of 80,000 tons of nano silica and 30,000 tons of nano alumina to actively seize domestic replacement opportunities for silicon dioxide in the high-end sector.
Adjust profit forecasts and maintain the “increase” rating: The company uses matting agents and adsorbents as a foothold, adheres to the middle and high-end development direction, continuously optimizes the product structure and increases the added value of the product. However, considering the impact of the delay in the construction of the new base, we adjusted profit expectations. The company's 2024-2026 operating income is 5.38, 6.92 million yuan, and 807 million yuan, respectively (originally 6.89 million yuan and 883 million yuan, an additional operating income of 807 million yuan in 2026). Net profit to mother was 1.64, 2.07 million yuan, and 262 million yuan (originally 1.76 million yuan), respectively , 226 million yuan, and an additional net profit of 262 million yuan in 2026). The corresponding PE was 16X, 13X, and 10X, respectively, maintaining the “increase in holdings” rating.
Risk warning: Project construction falls short of expectations; risk of falling demand