The overall production and operation are steady, and the expansion and layout of the industrial chain is accelerated. The company announced the “2023 Annual Report” and the “2024 First Quarter Report”: For the whole of 2023, due to the year-on-year decline in the prices of fluorine refrigerants and hydrogen fluoride products and the decline in refrigerant production and sales, the company achieved a total operating income of 3.334 billion yuan (-30.12% year over year) and net profit of 280 million yuan (-42.41% year over year). In addition, the company plans to distribute a cash dividend of 2.30 yuan (tax included) for every 10 shares to all shareholders. 2024Q1, benefiting from the sharp rise in the volume and price of the company's fluorine refrigerant products and volume compensation for hydrogen fluoride products, the company achieved operating income of 959 million yuan (+23.28% year over year), net profit of 154 million yuan (+672.53% year over year), and basic earnings per share of 0.25 yuan. Over the past three years, the company has achieved smooth and orderly production and operation; further consolidated its position in the refrigerant industry and continued to accelerate the expansion and layout of the industrial chain.
2024Q1, the volume and price of fluorine refrigerant products are rising rapidly, and the price of hydrogen fluoride products is being compensated by volume. With weak support from raw materials, the prices of some of the company's main products were also lowered in 2023: the average prices of the company's fluorine refrigerants and hydrogen fluoride products were -21.18%/-7.37%, respectively. In terms of foaming agents, due to the accelerated reduction of fluorine foaming agent quotas in 2023, domestic manufacturers were relatively tight in supply and the company's production and sales volume declined markedly, and the average price of foaming agents rose 15.95%. 2024Q1, the volume and price of the company's fluorine refrigerant products rose sharply, and hydrogen fluoride products were compensated by volume: in terms of refrigerants, prices rose markedly against the backdrop of quota policies being introduced and downstream air conditioning schedules exceeding expectations. The average price in the first quarter reached 23,829.03 yuan/ton, +8.47% year-on-month and +25.71% month-on-month, respectively; 2024Q1, the average prices of the company's fluorine foaming agents and hydrogen fluoride products were -27.31%, -3.63%, and -11.37% month-on-month, respectively. The production and sales volume of hydrogen fluoride products was 3.29 and 183,000 tons, respectively, +22.14% and +22.68% year-on-year, respectively, to offset the price by volume.
Implement an integrated industrial chain investment layout in the direction of fluorine refrigerants, fluorine fine chemicals, and fluoropolymers. In recent years, the company has actively laid out new materials, new energy and other business fields, and expanded into downstream high-value-added fields of fluorine chemicals. At present, the company has laid out projects: 3,000 tons (500 tons in the first phase) LiFSI project, 5,000 tons of FEP and 5,000 tons of PVDF projects, 6,000 tons of lithium hexafluorophosphate and 100 tons of high-purity PF5, 1,200 tons of R116, and 20,000 tons of high-purity electronic grade hydrofluoric acid.
Risk warning: Demand for fluorine chemicals is weak; project commissioning progress falls short of expectations; product prices have dropped sharply, etc.
Investment advice: Considering that the price of refrigerant products has risen significantly in the first quarter and the volume and price of the company's refrigerant products has risen sharply, we raised the company's profit forecast for 2024-2025 and added a profit forecast for 2026: we expect the company's net profit to the mother for 2024-2026 to RMB 5.45/6.38/762 million yuan, respectively (the previous forecast value for 2024/2025 was 481/587 million yuan), a year-on-year growth rate of 95.0%/17.0%/19.5%; diluted EPS was 0.89/1.04/ 1.25 yuan (the forecast value for the previous 2024/2025 period is 0.79/0.96 yuan); the corresponding PE corresponding to the current stock price is 47.9/41.0/34.3X. Maintain a “buy” rating.