Description of the event
In 2023, the company achieved revenue of 4.37 billion yuan (+14.9% YoY), realized net profit of 180 million yuan (-38.8% YoY), and realized non-net profit of 110 million yuan (-57.8% YoY). Among them, Q4 achieved revenue of 1.14 billion yuan in a single quarter (+5.2% YoY, -0.8% YoY), realized attributable net profit of 0.22 million yuan (-70.1% YoY, -58.4% YoY), and realized non-net profit of -38 million yuan (-155.0% YoY, -176.4% YoY). With 2024Q1, the company achieved revenue of 1.01 billion yuan (+7.8% year over year), realized attributable net profit of 37 million yuan (+27.4% year over year), and realized attributable deducted non-net profit of 0.37 million yuan (+57.1% year over year).
The company pays a cash dividend of 2.50 yuan (tax included) for every 10 shares to all shareholders.
Incident comments
In 2023, the fluorine-containing polymer materials sector was under pressure, and the prices of small refrigerants fell. In terms of the fluoropolymer materials sector, in 2023, the company's fluoropolymer materials segment achieved revenue of 1.35 billion yuan (+58.7% year over year) and a gross profit margin of 23.9% (-13.6 pct year on year). The foreign sales volume of the fluoropolymer materials sector was 27,000 tons (+163.2% year over year), with an average annual price of 49,000 yuan/ton (-39.7% year over year). The increase in sales was due to the successive commissioning of new HFP and FEP installations by Shao Wuyong, as well as the expansion of HFP and VDF installations in Inner Mongolia, but overall prices declined. According to Baichuan Yingfu, the average price of FEP (molding material) in 2023 was 104,000 yuan/ton (+12.1% YoY), the average price of FEP (cable material) was 70,000 yuan/ton (-8.2% YoY), and the average price of HFP was 40,000 yuan/ton (-22.8% YoY). In terms of the fluorocarbon chemicals sector, in 2023, the company's fluorocarbon chemicals sector achieved revenue of 2.36 billion yuan (-3.8% year over year), gross profit margin of 7.8% (-1.6 pct year on year). In 2023, the company's overseas sales volume of fluorocarbon chemicals was 114,000 tons (+18.7% year over year), and the average annual price was 21,000 yuan/ton (-18.9% year on year). Prices of some small refrigerants fell, and R152a/R143a (Yonghe factory price) was 1.6/20,000 yuan/ton in 2023 (-47.4%/-8.6% YoY). On the raw material side, the average purchase price of fluorite in 2023 was 2,757 yuan/ton (+21.3% year over year).
The 2024Q1 fluoropolymer sector was still under month-on-month pressure, and refrigerant prices were significantly boosted. 2024Q1 achieved sales volume of 10,000 tons of fluoropolymer materials (+146.2% YoY, +12.2% month-on-month), with an average price of 42,000 yuan/ton (-8.1% YoY, -1.5% month-on-month), FEP (moulding material) with an average price of 82,000 yuan/ton (-23.2% YoY), and an average price of FEP (cable material) of 52,000 yuan/ton (-20.5% month-on-month), the average price of HFP was 37,000 yuan/ton (-2.7% month-on-month), and the average price of PVDF (granules) was 7.8. (-5.9% month-on-month). 2024Q1 achieved sales volume of 20,000 tons of fluorocarbon chemicals (-16.9% YoY, -26.9% YoY), with an average price of 23,000 yuan/ton (+8.1% YoY, +5.4%).
Prices of refrigerant products have risen markedly across the entire line, and some small varieties have performed well. In 2024, the third-generation refrigerant industry quota was issued, and the company received a quota of 55,200 tons of third-generation refrigerants, which is at the forefront of the industry. As of April 25, 2024, R22, R32, R134a, R125, and R143a (Yonghe factory price) prices were +0.5, 1.4, 0.45, 1.75, 28,500 yuan/ton to 2.45, 3.1, 3.2, 4.5, and 60,000 yuan/ton compared to the beginning of the year. As the northern hemisphere heats up, export demand gradually increases, and export prices are expected to follow suit. Downstream air conditioning production schedules are good, and demand for R32 and R410a is growing. With the arrival of summer, it is expected to usher in a peak season for the maintenance market.
The company lays out polymer and fluorine fine chemicals, and the quality is expected to gradually improve. The 10,000 tons/year HFP of the Shaowuyonghe Fluorine Chemical Production Base Project was successfully put into trial production in January 2023, 0.75 million tons/year FEP and 10,000 tons/year PTFE were successfully put into trial production in April 2023, 50,000 tons/year PVDF and 0.05 million tons/year PPVE were successfully put into trial production in September 2023, and 30,000 tons/year HFPO successfully put into trial production in December 2023; Inner Mongolia Yonghe Xinjian Project successfully put into trial production in May 2023 Successful commissioning of trial production. As production capacity climbs, fluorine materials are expected to reverse.
The third-generation refrigerant boom is expected to improve over a long period of time. In terms of growth, the company's production capacity in Shaowu and Inner Mongolia was put into production one after another, and quality gradually climbed. Net profit attributable to 2024-2026 is expected to be $4.9 billion, 7.9 billion yuan, and 990 million yuan, maintaining a “buy” rating.
It has a “buy” rating.
Risk warning
1. The progress of the new project falls short of expectations; 2. Downstream demand falls short of expectations