Description of the event
The company released its 2024 semi-annual report. From January to June 2024, it achieved operating income of 0.242 billion yuan, a year-on-year decrease of 13.30%; net profit to mother of 1.9829 million yuan, a year-on-year decrease of 87.75%; and net cash flow from operating activities of 15.0097 million yuan, a year-on-year decrease of 65.85%. Among them, revenue for the second quarter of 2024 was 0.139 billion yuan, up 2.37% year on year, up 34.79% month on month; net profit to mother was 0.7919 million yuan, down 92.01% year on year, down 33.51% month on month.
Incident comments
The company focuses on R&D and production of new materials. The company's main business is polyether amines, optical grade polymer materials, and high light transmission materials, which are mainly used in wind power blades, shale gas extraction, automotive coatings, optical lenses, etc. Among them, polyether amine production ranks among the highest in the industry. The company has always focused on developing and producing various new chemical material products. Through continuous independent innovation, with perfect chemical infrastructure, self-developed patented technology, and rich production process control experience, the company has become a leading domestic technology-based enterprise for large-scale production of polyether amines, isobornyl (methyl) acrylate, and alicyclic acrylates. In addition, the company actively lays out and develops cyclic olefin copolymers (COC/COP), which is expected to fill the gap in the domestic market for high transmittance materials.
COC is a highly translucent material with excellent optical properties. Its preparation technology barriers are high, and domestic production is at a standstill. Due to the special results of COC, monomers, catalysts, and polymerization technology all have high technical barriers. Leading international companies such as Rayon, Polyplastics, and Mitsui Chemicals have formed a complete industrial chain from cyclic olefin monomers to polymer synthesis, and occupy most of the production capacity. Currently, industrial production in China's COC/COP industry has been idle for a long time, all dependent on imports, and the future market space is broad. The company has the highest design capacity and is the first to complete laboratory-level synthesis and verification. All indicators have met expectations, and it is expected to become the first listed company in China to mass-produce COC/COP. Take the company's COC main target product as an example. The sales price of Japanese manufacturers is basically between 0.12-0.16 million yuan/ton, while the company expects the market sales price to be around 0.08 million yuan/ton, which is highly competitive compared to the pricing of Japanese manufacturers. The relatively low price is conducive to changing the situation where COC/COP product prices remain high, and can greatly broaden the downstream application fields of products. Localization cost reduction is expected to open up more room for new demand and increase consumer demand for COC/COP. Furthermore, after the project is put into operation, the price of the company's products is lower than the price of existing products, which can help the company quickly form domestic substitutions for its products and increase the market share of the company's products.
COC is about to be put into operation, and the company has plenty of room for future growth. In the first half of 2024, high-transmittance cyclic olefin monomers have been mass-produced and sold in small quantities. A kiloton production line for high light transmission materials (cyclic olefin copolymer COC) has been built. The company is actively communicating with relevant departments before trial production and processing approval procedures for high-transmittance materials (cyclic olefin copolymer COC) to ensure that the new production line can meet regulatory requirements after trial production is put into trial production. 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, so as to obtain customer certification and orders as soon as possible
As a national high-tech enterprise that is deeply involved in new materials in China, considering that the COC project will be put into operation in 2024 without considering future changes in share capital, the company's net profit from 2024 to 2026 is estimated to be 0.076 billion yuan, 0.125 billion yuan, and 448 million yuan. Corresponding to the closing price PE on August 30, 2024 is 39.1X, 23.9X, and 6.7X, maintaining a “buy” rating.
Risk warning
1. The production capacity of polyether amines increased dramatically, and demand fell short of expectations; 2. The progress of new projects fell short of expectations; 3. The risk of falling prices after the production capacity of optical materials fund-raising projects was put into production.