Key points of investment
Incident: The company released its 2024 quarterly report, achieving operating income of 8 billion yuan, +32% YoY, +1% month-on-month, net profit of 1.07 billion yuan, net profit +36% YoY, +64% month-on-month, net non-net profit of 1.07 billion yuan, +38% YoY, +34% month-on-month, gross sales margin of 21.9%, +1.7 pct YoY and +4.1pct month-on-month. The performance is in line with expectations.
Traditional coal chemicals: falling coal prices led to cost improvements. The Jingzhou base contributed to an increase in production 1) During the 24Q1 period, the company's fertiliser/organic amine/acetic acid and derivatives achieved revenue of 18/6/10 billion yuan, accounting for 25%/9%/14% of the company's revenue, and achieved sales volume of 106/14/370,000 tons, respectively, +32/+220,000 tons year-on-year respectively. The increase in sales volume mainly came from the contribution of the first phase of Jingzhou. 2) From the cost side, the average price of 5,500 kilocalories of thermal coal in Qinhuangdao during the Q1 period was 914 yuan/ton, compared to -239 yuan/ton. The pressure on the company's cost side has eased somewhat. 3) From the product side, according to Baichuan Yingfu statistics, during the Q1 period, the average gross profit of the methanol/urea/DMF/acetic acid industry was 138/436/ -203/163 yuan/ton, respectively, +141/-113/-550/+17 yuan/ton, respectively. The operating rates of the industry were 74%/83%/45%/81%, respectively. Among them, DMF was affected by new production capacity investment, and the boom performance was relatively poor.
New energy and new materials: Product sales have continued to increase, and industry competition has intensified. 1) During the 24Q1 period, the company's new energy and new material products achieved revenue of 3.8 billion yuan, accounting for 53% of the company's revenue, and achieved sales volume of 540,000 tons, +110,000 tons over the same period last year. The increase in sales was mainly due to the expansion of products such as octanol, oxalic acid, and caprolactam. 2) By product, according to Baichuan Yingfu statistics, during the Q1 period, the average gross profit of the octanol/oxalic acid/DMC/CPL/PA6/adipic acid industry was 4318/250/ -1681/-229/281/-596 yuan/ton, and +2462/-892/-899/+744/+549/ -1132 yuan/ton, respectively. The industry operating rates were 96%/77%/48%/80%/67% of adipic acid products, respectively, with good alcohol performance, oxalic acid, DMC, etc. The decline in profits is quite obvious.
Energy efficiency levels lead the industry, and the bottom of the boom shows cost advantages. The company has long been adhering to the competitive advantage of low cost, digging deeper into the potential of devices and systems, and improving the comprehensive utilization rate of resources. At the Dezhou base, the project to replace a 3×480 t/h high-efficiency high-capacity coal-fired boiler with equal capacity was put into operation at the end of 23. The project improved the stability of the company's steam supply and achieved clean and efficient heating under the premise that the capacity and operation mode of the unit remained the same. At the Jingzhou base, according to the energy efficiency inspection report disclosed by the Jingzhou Municipal Government, the estimated annual comprehensive energy consumption of the Jingzhou Phase I project was 5% below the approved value, saving 32,000 tons of standard coal compared to the design estimate. Among them, the overall energy consumption per unit product of major products such as synthetic ammonia, urea, and coal-to-methanol was superior to the industry benchmark level.
Profit forecast and investment rating: We maintain the company's net profit forecast for 2024-2026 at 4,55.68 billion yuan. Based on the closing price on April 24, the corresponding PE is 13.4/11.0/8.9 times, maintaining a “buy” rating.
Risk warning: Product demand falls short of expectations, industry production capacity expands drastically, and coal prices fluctuate sharply