The company announced its 2024 quarterly report. In the first quarter, it achieved operating income of 46.161 billion yuan, +10.07%, and +7.84% month-on-month; realized net profit of 4.157 billion yuan, +2.57% year-on-year and +1.07% month-on-month; realized net profit without return to mother of 4.127 billion yuan, +3.47% year-on-year and +2.89% month-on-month.
Sales of polyurethane and fine chemicals increased year-on-year, and the average unit price declined. 2024Q1, the company's polyurethane/ petrochemical/ fine chemicals and new materials series products achieved revenue of 175.02/185.14/ 6.105 billion yuan respectively, +11.51%/+1.80%/+14.34% year-on-year. Among them, polyurethane/fine chemicals and new material series products achieved sales volume of 1.31 million tons/440,000 tons respectively, +18.02%/+25.71%, respectively. The average unit price was -5.52%/-9.05%. Sales increased but unit prices declined. The company's gross margin for the first quarter was 17.63% (YOY+0.10pcts, QoQ+0.77pcts), net margin was 9.89% (YOY-0.57pcts, QoQ-0.49pcts), and the expense ratio for the period was 5.69% (YOY+0.33pcts, QoQ-0.75pcts).
Projects under construction are progressing steadily, opening up space for medium- to long-term growth. According to the company's 2023 annual report, the commencement ceremony of the company's 1.2 million tons/year ethylene project was successfully held on March 9 at the ethylene cracking construction site in Wanhua Yantai Industrial Park. The downstream planning of high-end polyolefins of the project mainly includes devices such as ethylene cracking plants, low density polyethylene (LDPE) devices, and polyolefin elastomers (POE). Furthermore, through technological transformation, the company's Fujian MDI plant will expand MDI production capacity from 400,000 tons/year to 800,000 tons/year, and expand TDI production capacity from 250,000 tons/year to 330,000 tons/year, further consolidating the company's leading position in the global MDI and TDI fields.
Become Anada's largest shareholder to achieve business complementarity and collaboration. On February 26, 2024, Wanhua Battery, a wholly-owned subsidiary of the company, signed the “Anhui Anada Titanium Industry Co., Ltd. Share Transfer Agreement”. Wanhua Battery transferred 15.20% of Anada's shares held by the Copper Chemical Group through an agreed transfer. After the transaction is completed, Wanhua Battery will hold 32,683,040 shares of Anada, accounting for 15.20% of Anada's total share capital, making it Anada's largest shareholder. Anada's titanium dioxide is at the forefront of the industry. Wanhua Chemical also has good cooperative relationships with many major customers in the fields of coatings, plastics, and inks. At the same time, Wanhua Chemical has a complete sales system around the world. After Wanhua Battery Holdings Anada, this business has strong complementarity and synergy effects with Wanhua Chemical's existing business.
Investment advice: By continuing to increase technological innovation, continuously extend the industrial chain, and expand the production of high-end products, the company will further consolidate its leading position and achieve continuous development. The company's basic earnings per share in 2024 are expected to be 6.34 yuan. The current stock price corresponding to the 2024 price-earnings ratio is 14 times, maintaining the purchase rating.
Risk warning: Risk of project progress and benefits falling short of expectations; risk of exports falling short of expectations due to weakening economic demand in Europe and the US; risk of domestic macroeconomic fluctuations; risk of sharp fluctuations in raw material prices; risk of increased industry competition; and occurrence of force majeure events such as natural and man-made disasters.