Description of the event
In 2023, the company achieved revenue of 2.60 billion yuan (-3.2% YoY), realized net profit of 250 million yuan (-23.3% YoY), and realized non-net profit of 240 million yuan (-21.6% YoY). Among them, Q4 achieved revenue of 690 million yuan in a single quarter (+4.4% YoY, +7.3% YoY), realized net profit of 0.48 million yuan (YoY -40.4%, -27.2% YoY), and realized non-net profit of 45 million yuan (-40.5% YoY, -27.0% YoY). With 2024Q1, the company achieved revenue of 740 million yuan (+12.3% YoY, +7.3%), realized net profit of 76 million yuan (-2.8% YoY, +57.6% YoY), and realized non-net profit of 73 million yuan (-3.8% YoY, +60.5% YoY). In 2023, the company will pay a cash dividend of RMB 4.5 (tax included) for every 10 shares.
Incident comments
Fatty amines declined in 2023, and there was growth in the fields of organic solvents and new energy sources. In 2023, fatty amines achieved operating revenue of 1.23 billion yuan (-14.0% YoY), achieved gross profit margin of 16.6% (YoY -4.2pct), and achieved sales volume of 101,000 tons (-5.9% YoY). According to Baichuan Yingfu, the average price of isopropylamine and triethylamine in 2023 was 12311, 16026 yuan/ton (+6.7%, -9.0% year-on-year). The fatty amine business sector was affected by weak downstream market demand and the shutdown of equipment upgrades, and the profit level declined. In 2023, organic solvents achieved operating revenue of 490 million yuan (+11.8% year over year), achieved gross profit margin of 30.6% (+5.1 pct year on year), sales volume of 61,000 tons (+21.4% year over year), average annual price was 7,958 yuan/ton (-7.9% year on year), and the operating performance of the organic solvent business segment increased. In 2023, synthetic fragrances achieved operating revenue of 520 million yuan (-0.6% YoY), achieved gross profit margin of 20.6% (YoY -3.6 pct), achieved sales volume of 15,000 tons (+2.3% YoY), and an average annual price of 35,000 yuan/ton (-2.9% YoY). The subsidiary Xinrui Fragrance achieved net profit of 586.59 million (-28.8% YoY), and the company's other businesses achieved operating income of 330 million yuan (+22.4% YoY) and a gross profit margin of 39.3% (YoY +8.5pct). In the field of new energy, the company relied on self-developed extractants and new extraction methods, and continued to gain strength in the salt lake business sectors such as lithium extraction and lithium recycling, becoming the company's fastest-growing business segment. In 2023, the company achieved a gross profit margin of 23.3% (-0.3 pct year on year) and a net profit margin of 11.1% (-2.7 pct year on year).
2024Q1 synthetic fragrances and organic solvents are growing rapidly. 2024Q1 fatty amines achieved revenue of 360 million yuan (-4.0% YoY), with sales volume of 31,000 tons (+5.2% YoY); organic solvents achieved revenue of 120 million yuan (+15.5% YoY), sales volume of 15,000 tons (+15.0% YoY); synthetic fragrances achieved revenue of 180 million yuan (+52.9% YoY), and sales volume of 50,000 tons (YoY +61.6%). 2024Q1 achieved a gross profit margin of 22.3% (YoY -2.5pct, +2.7pct month-on-month) and achieved a net profit margin of 11.9% (-0.9pct YoY, +3.7pct month-on-month).
Continue to promote the upgrading of traditional industries and incubate and cultivate new projects. In 2023, the subsidiary Jiangsu Xinhua and Xingfu Electronics reached a joint venture agreement for the electronic grade isopropanol project. The company's isopropyl alcohol products expanded into the electronic grade high-end field, improving the profitability and market competitiveness of the products; the Jiangsu Xinrui Phase III project completed the EIA approval, and the Ningxia Fragrance Phase I project completed the established tasks and goals during the reporting period, and gradually put into operation. The expansion of production capacity is conducive to further improving the company's business acceptance capacity. The company's lithium extraction project was gradually implemented, and the extractive lithium mother liquor industrial test project signed with Salt Lake Co., Ltd. and Lanke Lithium was successfully put into operation in July; in the field of lithium battery recycling, the company cooperated with Jiangsu Yaoning New Energy Co., Ltd. to build a phase 1 10,000 tons/year waste lithium recycling production line, and successfully applied the extractant to Grimmie battery recycling production line.
The company's original main business was fatty amines and organic solvents. As the company plans to gradually launch production capacity and further broaden channels for lithium extraction and lithium battery recycling in salt lakes, the company has broad room for growth. The company's net profit for 2024-2026 is estimated to be $350 million, 5.1 million, and 650 million yuan, respectively, maintaining a “buy” rating.
Risk warning
1. The progress of the project fell short of expectations;
2. Downstream demand falls short of expectations.