Incident: The company released its 2023 report, achieving total operating revenue of 1,776 million yuan, a year-on-year decrease of 3.04%; net profit to mother of 85 million yuan, +39.51% year-on-year.
Prices of raw materials fell, and the company's profit increased year-on-year. In terms of main business products, ACR processing additives and impact modifiers achieved revenue of 912 million yuan, a year-on-year decrease of 1.11%; MBS impact modifiers achieved revenue of 616 million yuan, a year-on-year decrease of 0.81%; and MC impact modifiers achieved revenue of 204 million yuan, a year-on-year decrease of 22.24%. Affected by the year-on-year decline in prices of major raw materials, the sales price of the company's products decreased year-on-year. Although product sales increased during the reporting period, the realized sales revenue declined slightly.
Production capacity continues to expand, and there is plenty of room for performance growth. The company's PVC additive products mainly include ACR processing additives, impact modifiers, MBS impact modifiers, and MC impact modifiers, with a comprehensive production capacity of nearly 200,000 tons. In terms of new project construction, the company is vigorously promoting beneficial projects to expand production capacity, such as the 60,000 tons/year biodegradable polymer material PBAT project, the MBS old factory safety and environmental protection technology transformation project, the acrylic ester impact modifier safety and environmental protection transformation project, and the ECH workshop renovation project to vigorously promote the company's main PVC additives to increase production efficiency and make steady progress; at the same time, it is making great strides in R&D and production of biodegradable materials. PBAT production and PCA development are ongoing to help the company adapt to the trend of the times and diversified development.
Leading domestic polymer materials, high-quality development of “industry-research integration and policy guidance”. The company was founded in 1994. Its products include various products such as high-performance PVC additives and biodegradable materials, which are widely used in the processing and modification of downstream products such as PVC pipe profiles, floor and wall panels, sheets, films, foam boards, etc. The company has R&D centers, which are postdoctoral research workstations, Shandong certified enterprise technology center, and Shandong PVC additives engineering technology research center. The company's products have completely independent intellectual property rights, and have obtained more than 70 national patents since its establishment. The company has been deeply involved in the field of PVC additives for nearly 30 years, leading the technical level in the industry. It has nearly 3,000 domestic customers, and its products are exported to more than 60 countries and regions including Europe, America, South Asia, Southeast Asia and East Asia.
Profit forecasting and investment advice. EPS is expected to be 0.98 yuan, 1.52 yuan, and 2.05 yuan respectively in 2024-2026, corresponding to dynamic PE 11 times, 7 times, and 5 times, respectively. The company's main business is stable, and the new production capacity layout enhances the company's competitiveness. The company was given 20 times PE in 2024, with a target price of 19.60 yuan. The first coverage was given, and a “buy” rating was given.
Risk warning: Risks such as downstream demand falling short of expectations, sharp rise in raw material prices, and insufficient production capacity investment.