Part of Real Madrid's production line of 30,000 tons/year will be gradually put into operation in the second half of 2023. In the first half of 2023, Lukean Company withdrew from production capacity production of water-reducing agent products in the large variety sector, and switched to other main product lines through technical transformation of large-scale workshops. The technical improvement project with an annual output of 90,000 tons of polyether amine is expected to be completed in 2024H1.

Profit forecasting and investment ratings. We expect the company's net profit to be 381, 4.74, and 593 million yuan respectively (the original 2024-25 forecast was 4.27 million yuan and 510 million yuan). Combined with comparable company valuations, we gave 2024 21 times PE (originally 24x in 2023), corresponding to a target price of 13.65 yuan (originally 14.16 yuan). We maintain our “better than the market” rating.

Risk warning

1. Increased market competition;

2. Fluctuations in raw material prices;

3. Market price fluctuations.