Incident: The company recently released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 0.537 billion yuan, or -24.73% year over year, and realized net profit to mother of 23.9204 million yuan, -80.10%. In 2023, the company plans to distribute a cash dividend of 2 yuan (tax included) to all shareholders for every 10 shares, for a total cash dividend of 17.5875 million yuan, accounting for 73.53% of net profit due to mother in 2023. 2024Q1 achieved operating income of 0.103 billion yuan, -28.13% YoY, and realized net profit to mother of 1.191 million yuan, or -81.01% YoY.
Due to weak demand in the wind power industry, polyether amine, the main product in 2023, the company's performance declined. The company is a leading domestic technology-based enterprise for large-scale production of polyether amines, (methyl) isobornates, and alicyclic acrylates. The main product, polyether amine, has the advantages of good stability, poor whitening, good gloss and high hardness after curing. The terminals are used in wind power, oil and gas extraction, construction, adhesives, textile treatment, etc. By business, fatty amine/optical materials achieved revenue of 0.352/0.184 billion yuan respectively in 2023, down 28.38%/16.70% from 2022; gross margin was 9.30%/24.92%, down 19.33/8.85 percentage points from 2022; and sales volume was 0.0207/0.0053 million tons, respectively, up 13.04%/13.80% from 2022. Due to weak overall demand in the wind power industry in 2023, the company's main product, polyether amine, the annual installed volume of new fans connected to the grid was lower than expected. The combined increase in production capacity intensified industry competition, and product prices and gross margin dropped sharply.
The construction of a COC kiloton production line for high translucent materials has basically been completed, and construction of the Qianjiang project continues to advance. The high light transmission material COC/COP has excellent characteristics such as high transparency, low birefringence, good biocompatibility, strong insulation, and can improve the heat resistance of ethylene, and is widely used in the fields of optics, packaging, medicine, etc. Currently, production of COC/COP is mainly monopolized by Japanese companies such as Ryon Corporation, Polyplastics, Mitsui Chemicals, and JSR, while China's COC/COP relies on imports. According to the company's public information, the construction of the 1,000-ton COC production line has basically been completed, and special equipment inspection and production line commissioning are ongoing. In addition, the company invested 1.05 billion yuan to build a project with an annual output of 0.02 million tons of polyether amine and 0.03 million tons of optical materials (cyclic olefin monomers and polymers) in Qianjiang. In 2023, the company completed all pre-construction procedures and underground construction, and project construction continued to advance.
Investment suggestion: Based on future COC/COP mass production and production capacity plans, we expect the company's net profit to be 0.037/0.091/0.189 billion yuan for 2024-2026, corresponding EPS of 0.42/1.04/2.15 yuan, respectively, and 106.3/42.7/20.6 times corresponding to the current stock price PE, respectively. This is covered for the first time, giving a “gain” rating.
Risk warning: Projects under construction fall short of expectations, fluctuating raw material prices, falling product prices, industry competition increasing risks, etc.