Event: The company released its 2023 annual report and 2024 quarterly report. In '23, we achieved total revenue of 1.165 billion yuan, -40% year-on-year, and achieved net profit of 101 million yuan, or -84% year-on-year. 24Q1 achieved total revenue of 274 million yuan, -3%/-6% YoY, net profit to mother of 0.26 million yuan, -37%/+3% YoY, after deducting non-net profit of RMB15 million, or -53%/-12% YoY.
The fee rate declined, and the Q1 net interest rate rose slightly month-on-month. In 23 years, industry supply increased, demand weakened, and competition intensified.
Existing companies in the supply-side industry are gradually expanding their production scale, new entrants are gradually releasing production capacity, and demand in the demand-side glass fiber, adhesives, coatings, and insulation materials industries falls short of expectations. Industry prices are falling, and company profits are under pressure. The company's product prices declined significantly in 23 years. The average price of aminosilane/epoxy silane/sulfurous silane/vinyl silane/orthosilicate was 2.51/3.25/1.83/1.66/11,900 yuan/ton, -55%/-47%/-33%/-37%/-39%, 24Q1's average price of the above products still declined to a certain extent. The average price of 24Q1 was 2.19/3.05/1.70/1.61/121,000 yuan/ton, -25%/-15%/-17%/-20%/-20%/-20%/-20%/-20%/-20%/ The ratio was -14%/-8%/-3%/-3%/+0.4%, respectively. In terms of raw material prices, 24Q1 silicon powder/propylene chloropropylene/ethanol/allyl glycidyl ether average price ratio was -14%/-6%/-7%/-19%. The decline in the average price of products was greater than the decline in the price of raw materials, and the company's profitability declined. The gross margin/net margin in '23 was 15.15%/8.68%, -27.21/-24.13pct year on year. The 24Q1 company's gross margin was 14.82%, -4.69/ -5.40pct, and the overall expense ratio decreased. The 24Q1 total expense ratio was 8.23%, +0.72/-4.31pct, the net margin was 9.35%, and -5.00/+0.83pct month-on-month.
Q1 Sales increased, and production capacity is expected to increase in 24 years. At the end of '23, the company's “Technical Improvement and Capacity Expansion Project with an Annual Output of 65,000 Tons of Silicone” was put into operation. 24Q1 sales increased year-on-year. Aminosilane/epoxy silane/sulfurous silane/vinyl silane/orthosilicate sales volume was +5%/+40%/+14%/+7%/-8%, +10%/+4%/-12%/-21% month-on-month. The company will have several projects to be put into operation in '24. The product matrix is expected to be further enriched, and production capacity is expected to increase.
Investment advice: Silane prices are at the bottom. We expect net profit to be 1.59/2.22/293 million yuan for 24-26, corresponding PE of 24.5/17.5/13.3x, respectively, to maintain the “gain” rating.
Risk warning: Production capacity release falls short of expectations, raw material prices fluctuate, and downstream demand falls short of expectations.