Description of the event
On April 28, China Chemical released the 2023 annual report and the 2024 first quarter report. In 2023, the company achieved total operating income of 179.196 billion yuan, +13.10%; realized net profit of 5.426 billion yuan, +0.20% year on year; realized net profit without return to mother of 5.202 billion yuan, +3.86% year on year; 2023Q4 achieved total operating income of 47.533 billion yuan, +25.56% year on month; achieved net profit to mother of 1.703 billion yuan, year-on-year + 0.48%, +119.28% month-on-month; realized net profit without return to mother of 1,494 billion yuan, +6.82% year-on-year, and +96.87% month-on-month. In 2024Q1, the company achieved total operating income of 45.171 billion yuan, +5.54% year over month, -4.97% month on month; realized net profit of 1,216 billion yuan, +9.50% year on year and -28.59% month on month; realized net profit without return to mother of 1,151 billion yuan, +3.70% year on year and -22.95% month on month.
On June 17, China Chemical announced the main operating conditions from January to May 2024. The cumulative amount of new contracts signed from January to May 2024 was 167.443 billion yuan, an increase of 18.11% over the previous year.
New orders grew steadily, and full-year performance reached a new high
In 2023, the company achieved total revenue of 179.196 billion yuan, +13.10% year-on-year; realized net profit to mother of 5.426 billion yuan, +0.20% year-on-year. In 2023, the company's revenue reached a new high. The main reasons are: first, the company increased its operating efforts, and the order volume increased dramatically to improve performance. The annual contract amount was 326.751 billion yuan, an increase of 10.05% over the previous year; second, it actively carried out fine management and efficient production and operation; third, actively carried out actions to improve quality and efficiency, and the company's core competitiveness and comprehensive strength were significantly enhanced.
Adhere to the “technology+industry” integrated development strategy, deeply cultivate technology-barrier-based industries, adhere to the “innovation-driven” integrated development model, explore the integrated development model of “innovative technology+characteristic industries”, focus on research and development of new chemical materials and specialty chemicals such as high-performance fibers, high-end nylon materials, and degradable plastics, focusing on research and development of new chemical materials and specialty chemicals, such as caprolactam, adiponitrile, aerogels, environmentally friendly degradable plastics, etc., and expand the field of new materials with high added value to achieve “industrial backfeeding, R&D support, engineering optimization, and industrial upgrading” Combine. In 2023, new industrial projects such as Tianchen Qixiang, Hualu New Materials, and Donghua Tianye have accumulated operating data and production experience, continuously optimized operation, and gradually increased production and operating loads. On December 19, 2023, China Chemical Tianchen Quanzhou 600,000 tons/year propane oxide concentration plant successfully operated at one time and produced a qualified 50% concentrated hydrogen peroxide product. In 2023, Siding Kechuang's 30,000 tons/year phase change energy storage materials and other projects successfully achieved mechanical transfer. It is expected to be put into operation in the second quarter of 2024.
Investment advice
We are optimistic about the company's “technology+industry” integrated development strategy, but considering the impact of the macro environment, the growth rate of new project contract amounts signed by the company has slowed down, and we have lowered our profit forecast for 2024-2025.
The company's net profit for 2024-2026 is estimated to be 58.23 billion yuan, 66.94 billion yuan, and 7.080 billion yuan, respectively (the original 2024-2025 forecast values were not 80.16 billion yuan and 9.325 billion yuan), with year-on-year growth rates of +7.3%, +15.0%, and +5.8%. The corresponding PE was 8.5, 7.4, and 7.0 times, respectively. Maintain a “buy” rating.
Risk warning
(1) Risks caused by price fluctuations of raw materials and major products; (2) production safety risks;
(3) Environmental protection risks;
(4) Project commissioning progress falls short of expectations;
(5) Equity incentives fell short of expectations.