The main business boom is under pressure, and COC industrialization may be implemented to maintain the “buy” rating company 2024H1 to achieve revenue of 0.242 billion yuan, -13.30% year over year; achieve net profit of 1.9829 million yuan, or -87.75% year over year. In the first half of 2024, due to factors such as the failure to carry out large-scale construction of offshore wind turbines and the large increase in domestic production capacity, the price of polyether amine products fell to an all-time low, and the company's operating performance declined sharply over the same period last year. We keep the company's profit forecast unchanged. We expect the company's net profit to be 0.026, 0.121, and 0.191 billion yuan for 2024-2026, corresponding EPS of 0.30, 1.37, and 2.17 yuan/share, and the current stock price corresponding to PE is 114.9, 24.7, and 15.6 times. Although the company's operations are under great pressure in the short term, we are still optimistic about the imminent breakthrough in COC industrialization and the broad future prospects of this material, maintaining a “buy” rating.
The polyether amine boom bottomed out, and sales of optical materials (automotive coatings) increased sharply in 2024H1. The sales volume of fatty amines and optical materials (automotive coatings) was 9,520 and 3,244 tons, respectively, -8.2% and +34.2% year-on-year; the average prices were 15,211 and 29,882 yuan/ton, respectively, -13.83% and -24.71%, respectively. Sales declined due to the 2024Q1 maintenance of the company's polyether amine plant in the past month. According to Baichuan Yingfu data, after reaching a record low of 0.012 million/ton in July (tax included), the price of polyether amine D230 has now recovered to 0.014 million/ton (tax included) (as of August 30). However, the price of the company's products is significantly higher than the average market price. Thanks to its excellent production capacity research and development capabilities, it continuously adjusts product results, and continues to explore market demand for small-specification polyether amines.
The kiloton COC production line is expected to be tested in Q3. The fixed increase has been approved. The Qianjiang project is progressing smoothly. According to the company's announcement, its COC kiloton production line was completed in the first half of 2024. It is currently undergoing COC trial production approval procedures, and trial production is expected to be carried out in 2024Q3. In addition, the company's sales department actively contacts downstream related enterprises and establishes initial contacts. Once mass production is carried out, samples will be tested with downstream customers to obtain customer certification and orders as soon as possible. Furthermore, on July 5, 2024, the company obtained a document from the China Securities Regulatory Commission's “Approval to Register the Issuance of Shares to Specific Targets” by Wuxi Akeli Technology Co., Ltd. The company's Hubei Qianjiang project is expected to complete all civil construction in 2024Q3. The project includes 0.02 million tons of polyether amine and 0.03 million tons of COC production capacity. It is one of the major investment projects in Hubei Province in 2023, and will be one of the company's important production bases in the future.
Risk warning: Project progress fell short of expectations, product prices fell sharply, and downstream demand fell short of expectations.