The company released semi-annual results, 24H1 revenue of 97.07 billion yuan (YoY +10.8%), gross profit of 16.4% (YoY flat), net profit of 8.17 billion yuan (YoY -4.6%); of which Q2 revenue was 50.91 billion yuan (+11.4% YoY, +10.3%), gross profit margin 15.3% (-0.1 pct YoY, -2.3 pct), net profit to mother 4.02 billion yuan (YoY -11.0%, month-on-month-) 3.4%). The company announced an interim dividend of 0.52 yuan per share (tax included), with a total distributed profit of about 1.633 billion yuan.
Comment:
Sales in the polyurethane sector increased year-on-year. The company's H1 polyurethane segment sold 2.69 million tons (+14% year over year), revenue was 35.46 billion yuan (+8.2% year over year), and gross profit margin was 28.0% (-1.1 pct year over year).
The Q2 polyurethane segment sold 1.38 million tons (+11.3% YoY, +5.3% YoY), with revenue of 17.95 billion yuan (+5.2% YoY, +2.6% YoY). According to Baichuan Yingfu, the average price of pure MDI, polymer MDI, and TDI in China was 18817/17141/14801 yuan/ton (-0.5%/+11.8%/-17.8% YoY, -7.2%/+6.1%/+11.3%). Demand in the global polyurethane industry continued to grow in the first half of the year. Some overseas devices experienced supply fluctuations, and pure benzene prices continued to be high, which had a driving effect on the price of polyurethane products. The company improved technology and expanded production of MDI devices in Fujian, increased the effective production capacity of TDI devices, and put into operation a new polyether plant in Yantai. Production and sales in the polyurethane sector increased significantly from month to month.
The petrochemical sector is still under pressure, and the new materials sector is growing rapidly. The company's H1 petrochemical segment revenue was 39.57 billion yuan (+9.5% year over year), with a gross profit margin of 4.5% (+2.2 pct year over year). In June, the company announced an EIA plan to transform the 1 million ton/year ethane feed plant. Jiangnan Shipbuilding delivered two VLEC ships to the company in April and July of this year. The H1 New Materials segment generated revenue of 12.98 billion yuan (+15.2% year over year) and a gross profit margin of 17.0% (-5.1 pct year over year). In June, the company successfully put into operation a project with an annual output of 0.18 million tons of hexanediamine, and the HDI industry chain support was more complete; the first phase of the PoE project with an annual output of 0.2 million tons was put into operation in June, and the industrialization of emerging businesses such as citral and fragrance is progressing.
Investment advice: As a global leader in polyurethane, the company will fully benefit from the gradual recovery in polyurethane demand with production capacity and cost advantages. Coupled with the continuous expansion of the company's new materials business, the company's performance will maintain steady growth. Considering the weak recovery in downstream demand for polyurethane, we adjusted net profit to mother for 24-26 to 17.49/20.02/23.47 billion yuan (previously 19.56/22.22/24.6 billion yuan), and the corresponding PE was 13X/11X/10X, respectively, maintaining a “buy” rating.
Risk warning: raw material prices fluctuate, project commissioning falls short of expectations, downstream demand falls short of expectations