The company released its 2024 quarterly report. In the first quarter, the company achieved revenue of 101 million yuan (yoy +2.05%, qoq -11.82%), net profit of 30 million yuan (yoy +18.01%, qoq -16.20%), and net profit after deducting non-return to mother of 27 million yuan (yoy +25.50%, qoq -16.31%). The company actively promoted the iterative upgrading of products such as photovoltaics, petrochemical plastics, and anti-rust pigments. The first quarter results were in line with expectations.
Product profits increased further in the first quarter. (1) The prices of the main raw materials soda ash and concentrated sulfuric acid fell sharply in the first quarter of 2024. According to Baichuan Yingfu data, 2024Q1 soda ash and concentrated sulfuric acid decreased by 16% and 18% month-on-month to 2,129 yuan/ton and 199 yuan/ton, respectively, and the pressure on the cost side was relieved. ; (2) The company actively promoted the iterative upgrading of products such as matting agents and adsorbents, 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. The company's gross sales margin increased 2.1 pct to 47.34% month-on-month in the first quarter.
The dual sites are about to be put into operation to ease production capacity bottlenecks. By the end of 2023, the company had a production capacity of 14,000 tons of nano silica and 10,000 tons of nano alumina production capacity, reaching 151% and 101% of the annual capacity utilization rate in 2023. The Anhui base is expected to be put into operation in May 2024. The Hunan base will add 20,000 tons of ultrafine silicon dioxide aerogel series products per 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. It is expected to ease the company's 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.
Maintain profit forecasts and maintain a “gain” rating: The company uses matting agents and adsorbents as a foothold, and continuously optimizes the product structure to enhance the added value of products. As the investment performance of the new base is expected to increase steadily, we maintain profit forecasts. The company's 2024-2026 revenue is 5.38, 6.92, and 807 million yuan, respectively, and net profit to the mother is 164, 2.07, and 262 million yuan, respectively. The corresponding PE is 18X, 14X, and 11X, maintaining the “increase” rating.
Risk warning: Project construction falls short of expectations; risk of falling demand