Core views:

The company released its 2024 quarterly report: Under the combined catalysts of a recovery in domestic trade combined with a boom in foreign trade, 24Q1's profit reached a record high in a single quarter. 24Q1 achieved revenue of 386 million yuan, +13.64% year over year; realized net profit of 77 million yuan, +0.57% year over year; realized net profit without deduction of 77 million yuan, +0.91% year on year. On the cost side, the sales expense ratio was 0.8%, +0.07pp year over year, or due to the increase in sales staff expenses due to the increase in business scale; the management expense ratio was 3.77%, -0.9pp year on year, and the financial expense ratio was 1.67%, -0.07pp year on year, both of which achieved slight improvements.

Share buybacks continue to advance. On October 9, 2023, the company announced the repurchase of the company's A shares through centralized bidding. The repurchased shares will be used for employee stock ownership plans or equity incentive plans. The repurchase amount is not less than 50 million yuan and no more than 80 million yuan. According to the first quarterly report, as of April 26, 2024, the company had repurchased 4.07 million A-shares, accounting for 1.45% of the total share capital, and the cumulative repurchase amount reached 63.696 million yuan.

Domestic trade grew steadily with production and sales, and foreign trade enjoyed cyclical dividends to build a second curve. As a leading transportation enterprise for hazardous chemicals in domestic trade, the company has obvious advantages in terms of approved additional capacity, capacity purchase and construction costs, and network scale effects. While the industry is in short supply, it has been able to achieve steady growth through production and marketing. Foreign trade chemical shipping is currently in an upward boom range due to insufficient investment in its own supply and spillover from the bull market for refined oil products. According to the company's official website, two stainless steel foreign trade chemical tankers “Xingtong Kaiming” and “Xingtong Kaiseng” were put into operation in February 2024. With the rapid expansion of production capacity in the short to medium term, the company is expected to fully enjoy the upward cycle dividends. Looking at refineries moving eastward and domestic chemicals going overseas in the long run, there is plenty of room for growth in foreign trade business, which is expected to become the second curve.

Profit forecast and investment advice: The company's EPS for 24-26 is expected to be 1.14, 1.41, and 1.69 yuan/share, respectively. The judgment of the company's reasonable value of 17.1 yuan/share remains unchanged, corresponding to the 24-year PE valuation 15 times, and maintaining a “buy” rating.

Risk warning: the risk of demand fluctuations, capacity expansion falling short of expectations, capacity regulation policy risks, etc.