Net profit for 24Q1 was 380 million yuan, -15% year-on-year, maintaining the “increase in holdings” rating
The company released its quarterly report for the year 24 on April 26, achieving revenue of 6.9 billion yuan, yoy +5%, net profit of 380 million yuan (after deducting 360 million yuan), and yoy -15% /qoq -14% (after deducting yoy -13% /qoq -18%). At the same time, the company plans to implement the 24-year employee stock ownership plan, which includes no more than 1,500 senior management personnel and core technical personnel. We expect the company to have a net profit of 18/22/2.6 billion yuan in 24-26 years, corresponding EPS of 1.64/2.03/2.37 yuan. Combined with the company's 24-year wind consensus average of 11xPE, considering the growth potential of the new project, we will give the new project 15 xPE a target price of 24.6 yuan to maintain the “gain” rating.
Weak glyphosate and silicone markets dragged down profits, and the fine chemicals business expanded well. 24Q1 fertiliser/glyphosate series products had revenue of 8.9/1.23 billion yuan (yoy +19%/+28%). Due to the peak season of phosphate fertilizer and the gradual release of new glyphosate production capacity, sales volume was 287/58,000 tons (yoy +24%/+96%), respectively, but product prices were weak. The average price yoy -4%/-35% was 0.31/212,000 yuan/ton. 24q1 silicone series product revenue YoY +0.2% to 590 million yuan, sales volume yoy +19% to 52,000 tons, average price YOY -15% to 11,400 yuan/ton. The silicone boom is still weak. The sales volume of specialty chemicals was +86% to 118,000 tons, revenue was 82% to 12.4 yuan, and the average price YOY -17% was 10,500 yuan/ton. The company's consolidated gross margin for a single quarter was yoy-1.5pct to 14.5% (qoq-12.4pct), and the period expense ratio yoy+0.1pct to 6.7% (qoq-5.7pct).
The silicone economy is weak, and glyphosate is waiting for downstream recovery
According to Baichuan Yingfu, the prices of phosphate ore/yellow phosphorus/monoammonium/diammonium/glyphosate on April 26 were 0.10/2.29/0.28/0.37/26,000 yuan/ton respectively, compared to +1%/+1% at the beginning of the year. The phosphate fertilizer boom declined somewhat due to off-season and other factors, while the price of phosphate ore remained relatively high for nearly ten years. In terms of glyphosate, the industry chain is expected to recover and gradually improve.
In terms of silicone, the price of DMC/107 glue on April 26 was -4%/-7% compared to the beginning of the year to 135/13,900 yuan/ton. Due to factors such as heavy industry production expansion and weak demand, we expect the economy to improve.
The product line continues to expand, and new projects help future growth
According to the company's 23rd annual report, in terms of new technology, in 23, the company pioneered a new process for producing dimethyl disulfide in liquid phase sodium methionate; introduced several new BOE etching solutions to downstream semiconductor companies; opened up experimental routes for synthesizing and amplifying glyphosate; and built a 100 kg black phosphorus amplification device. In terms of new projects, Xingfu Electronics' 30,000 tons/year electronic-grade phosphoric acid and 20,000 tons/year electronic-grade etching solution, Hubei Ruijia 50,000 tons/year photovoltaic glue, Hubei Xingyou 300,000 tons/year battery-grade iron phosphate (phase I), Hubei Xingrui 550 tons/year microcapsule/5000 m3/year aerogel felt, Hubei Jixing 800 tons/year phosphating agent, etc. have been put into operation; Houping's 2 million tons/year phosphate beneficiation and pipeline transportation project and Hubei Xingrui 30,000 tons/year liquid glue (phase 1) are being accelerated.
Risk warning: downstream demand falls short of expectations; progress of new projects falls short of expectations.