Key points of investment
Incident: In the first quarter of 2024, the company achieved operating income of 589 million yuan, an increase of 13.74% year on year; net profit to mother was 76 million yuan, up 26.68% year on year; net profit after deducting non-return to mother was 50 million yuan, a decrease of 9.12% year on year; and weighted average ROE increased by 0.37 pct year on year to 2.38%.
24Q1 revenue/net profit to mother also increased 14%/27%. In the first quarter of 2024, the company achieved operating revenue of 589 million yuan, an increase of 13.74% over the previous year. In terms of revenue, specialty gas accounted for 44.59%, bulk gas accounted for 35.85%, on-site gas production and rent accounted for 10.48%, and gas accounted for 9.08%. In the first quarter of 2024, net profit attributable to mother was 0.76 million yuan, up 26.68% year on year; net profit after deducting non-return to mother was 50 million yuan, down 9.12% year on year. Among them, gross sales margin/net sales margin for the first quarter of 2024 were 34.10%/13.23%, down 4.01 pct/y up 0.89 pcts year on year. The non-recurring profit and loss for the first quarter of 2024 mainly came from non-current asset disposal gains and losses of $15 million and government subsidies of 0.16 million yuan.
The downstream semiconductor industry is expanding smoothly, and specialty categories are constantly being improved. The company is committed to the industrialization of specialty gases in the field of electronic semiconductors, and has gradually achieved import substitution for various products. In 2023, the company achieved revenue of 743 million yuan in the semiconductor industry, an increase of 58.41% over the same period, and gross margin increased by 3.70 pcts to 47.67%. The company's leading products, such as ultra-pure ammonia, high-purity nitrous oxide, etc., have been supplied to well-known semiconductor customers such as SMIC, Hynix, Magiguang, and Lianxin Integrated; new electronic-grade ethyl orthosilicate and high-purity carbon dioxide are being actively introduced to integrated circuit customers, all of which have achieved small-batch supply to some customers; new products including perfluorobutadiene, monofluoromethane, octafluorocyclobutane, dichlorodihydrogen silicon, hexachloroethylene silane, and trimethylsilamine are being industrialized.
The first electronic bulk gas carrier project achieved mass production, and helium resources guaranteed the needs of downstream customers. Guangdong Xinyue Energy, the company's first electronic bulk gas carrier project, was mass-produced and supplied in August 2023, and began contributing to stable revenue and profits. At the same time, the company continues to develop new projects, and has obtained various electronic bulk gas carrier projects such as Wuxi China Resources Shanghua, Suzhou Longchi, and Xi'an Weiguang Technology. The company actively explores helium resources and signed a strategic cooperation agreement with CIMC Enric for liquid helium storage tanks in May 2023. Various parties have developed procurement channels for liquid helium storage tanks, and the number of storage tanks has steadily increased. In 2023, the company sold 16 imported liquid helium storage tanks of helium. The company's helium resources not only fully guarantee the needs of pan-semiconductor customers such as integrated circuits and LCD panels, but also penetrated into the medical and industrial fields.
Profit forecasting and investment rating: The company continues to innovate and build technical barriers, and the business layout accelerates expansion.
The company actively develops medium and large-scale on-site gas production, continues to increase retail outlets in core regions, and strengthens the competitiveness of comprehensive gas suppliers. We maintain our forecast of 2024-2026 net profit of RMB 4.1/53/64 billion, a year-on-year increase of 30%/29%/20%, corresponding to 2024-2026 PE of 23/18/15 times (valuation date 2024/4/29), maintaining a “buy” rating.
Risk warning: Downstream demand falls short of expectations, and market competition intensifies.