Description of the event
The company released its 2024 quarterly report, achieving operating income of 590 million yuan (YoY +13.7%, -9.0% month-on-month), realized net profit of 80 million yuan (+26.7% YoY, +36.5% month-on-month), and realized non-net profit of 50 million yuan (-9.1% YoY, -14.5% YoY).
Incident comments
The 2024Q1 business continues to develop to increase revenue and profit. In the first quarter of 2024, the company increased its market development efforts and achieved a significant year-on-year increase of +13.7% in revenue (of which special gas accounted for 44.6%, bulk gas accounted for 35.9%, on-site gas and rent accounted for 10.5%, and gas accounted for 9.1%). In addition, the company obtained asset disposal benefits of 15 million yuan included in non-recurring profit and loss, and net profit attributable to +26.7% year-on-year.
Comprehensive gas supplier with strong strength. The company is an important supplier of specialty gases and bulk gases in China. According to statistics from the China Industrial Gas Industry Association, the company's sales from 2021 to 2023 ranked first in the Association's private gas enterprise statistics for three consecutive years. It combines bulk gas and specialty gases, and its strength continues to grow.
In terms of bulk gases, the company is increasing its self-sufficiency in raw materials, expanding sales channels and on-site gas production. In terms of raw material support, the company actively built its own air separation project. The Suxiangjin Hongrun air separation project was successfully capped in June 2023. Trial production work will be carried out after public support. After production is put into operation, it will increase the company's self-sufficiency ratio of liquid oxygen and liquid nitrogen. In terms of retail market integration, as a comprehensive gas company developed from bulk gas, the company has experience in comprehensive regional market integration. The company is firm in its horizontal strategy and continues to carry out cross-regional market integration. From 2020 to 2023, the number of subsidiaries controlled by the company has risen from 27 to 67, and the number of layout areas has increased from 6 to 17. In terms of on-site gas production, on March 21, 2024, the company signed an “Investment and Supply Contract” with Yingkou C&D to build a new 66,000 Nm. /h Air separation device to supply each other with industrial gas products — oxygen and nitrogen. According to contract estimates, the contract amount is approximately RMB 2.4 billion (excluding tax), and the project is expected to be put into operation in August 2025. The company is vigorously expanding its bulk gas business and raising the upper limit of growth.
In terms of electronic specialty gas, the company increased production capacity of superior products and developed new products. The company's superior products, such as ultra-pure ammonia and high-purity nitrous oxide, have been officially supplied to a number of well-known semiconductor customers such as Hynix, Lianxin Integrated, and China Resources Microelectronics. The Meishan Jinhong Ultrapure Ammonia Project was tested in July 2023, and Vietnam's Jinhong Ultrapure Ammonia Project is in the process of industrialization. Production of new electronic grade ethyl orthosilicate and high-purity carbon dioxide are being actively introduced to integrated circuit customers, all of which have been supplied in small quantities to some customers. Seven new products, including perfluorobutadiene, monofluorobutane, octafluorocyclobutane, dichlorodihydrogen silicon, hexachloroethylene silane, ethsilane, and trimethylsilamine, are being industrialized, opening up room for growth.
The bulk of the electronic gas carrier is advancing one by one. The company's first electronic bulk gas carrier project, the Guangdong Xinyue Energy Project, was mass-produced and supplied in August January 2023, indicating that the company has complete electronic bulk gas carrier business development, construction and operation capabilities. The Northern Integrated Innovation Center project has officially supplied gas, and several projects are about to welcome gas supply. In May 2023, the company signed a strategic cooperation agreement with CIMC Enric for liquid helium storage tanks. Various parties have developed procurement channels for liquid helium storage tanks. The number of storage tanks has been steadily increasing. Helium gas resources fully guarantee the needs of integrated circuit customers and enhance operation and maintenance capabilities. The company's electronic bulk carrier gas is expected to develop rapidly.
Maintain a “buy” rating. The company is a powerful integrated gas supplier. It is expanding horizontally and vertically, and has broad prospects. The net profit is estimated to be 4.1, 4.9, and 580 million yuan for 24-26, maintaining a “buy” rating risk alert
1. The macroeconomic economy fell short of expectations;
2. Industry competition increases risks.