Core views

The company achieved revenue of 5.94 billion yuan in Q3, +65.2% YoY, +11.1% month-on-month; Q3 achieved net profit of 1.79 billion yuan to mother, +188.9% YoY, +33.8%. The market prices of Q3 VA and VE in the nutrition sector increased 128%/76% respectively, and contributed a certain amount of increase, contributing to the core increase in Q3 net profit. BASF has announced that VE will resume production for half a year. The industry sentiment is expected to be greatly extended. Currently, industry inventories are relatively low, and they are optimistic that VE will start a second round of upward trend; the high level of methionine prices is relatively stable, and the 0.18 million ton liquid egg construction is expected to contribute significantly; the new materials business is blossoming, and PPS and adiponitrile projects will continue to advance strongly in the future. Energetic.

occurrences

The company released its quarterly report for the year 24. In Q3, the company achieved revenue of 5.94 billion yuan, +65.2% year-on-year, and +11.1% month-on-month; Q3 achieved net profit of 1.79 billion yuan to mother, +188.9% year-on-year, and +33.8% month-on-month.

Brief review

The increase in Q3 profit was mainly contributed by vitamins. VE has begun a second round of price increases in the Q3 VA and VE market prices, respectively, and increased by a certain amount, contributing to the core increase in Q3 net profit. In terms of other products, the market prices of methionine, VC, VB6, VB1, menthol, and PPS Q3 were -4%/+1%/+9%/+7%/-7% /+0, respectively, with limited overall impact.

Looking ahead to the future market, VE's transaction price began to rebound on October 18. The latest transaction was 128 yuan/kg. BASF has announced that the resumption of VE production will be delayed for half a year. It is expected that the industry boom will be greatly extended. Currently, industry inventories are at a relatively low level. It is optimistic that VE will start a second round of upward trend, further contributing to the increase in performance.

The methionine boom was maintained, and the company took advantage of cost advantages to expand rapidly

At the end of August, Evonik officially announced that the Singapore site had completed 0.04 million tons of technical transformation and full production. Q3 methionine prices were less affected and remained booming. The company already has a production capacity of 0.3 million tons of solid eggs, and continues to advance new projects such as 0.18 million tons of liquid eggs as a joint venture with Zhenhai Refining Co., Ltd., rapidly expanding its market share with industry-leading cost advantages.

The fragrance and fragrance are growing steadily, and the new materials business continues to advance

By expanding categories, the company has maintained a growth rate of more than 10% in the fragrance business in recent years, and is expected to continue to thrive based on industry barriers. In terms of new materials, the company is planning a 1 million ton nylon industry chain project. Currently, the 0.1 million ton adiponitrile-hexanediamine project is being approved. In addition, biologic glyphosate projects and new PPS applications continue to advance, enabling the company to grow in the long term. At present, the company's three major businesses have developed in a trident style. Among them, flavors and fragrances have built a stable basic market. Nutritional products and new materials each contribute significant increases in the short, medium, and long term, and the company's future growth momentum is strong.

Profit forecasting and valuation: Significant increase in the gradual expansion of new projects. The company's net profit for 2024-2026 is expected to be 6.007, 6.665, and 6.807 billion yuan, and the corresponding PE is 11.8X, 10.6X, and 10.4X, respectively, maintaining a “buy” rating.

Risk warning: downstream demand falls short of expectations; project commissioning falls short of expectations; industry competition intensifies.