occurrences

The company released its three-quarter report for 2024. In the first three quarters of 2024, the company achieved revenue of 147.604 billion yuan, and net profit of 11.093 billion yuan, or -12.67% year over year. Of these, in a single quarter, the company achieved operating income of 5.054 billion yuan, +12.48% year over year, net profit to mother of 2.918 billion yuan, and -29.41% year on year. The performance was in line with expectations.

profiling

The overall operation of the company has remained steady, and financial expenses and income tax expenses have increased. In terms of expenses, from January to September 2024, the company's sales expenses were 1.166 billion yuan, +16.83%; management expenses were 2.187 billion yuan, +26.20% year over year; financial expenses were 1.694 billion yuan, +43.07% year over year, mainly due to increased interest expenses due to increased interest-bearing liabilities; the company's R&D expenses were 2.186 billion yuan, +26.14% year over year. The company maintained a high level of R&D investment, building a good technical foundation for the company's long-term layout. In terms of income tax expenses, the company's income tax expenses for January-September were 2.058 billion yuan, +31.17% compared with the same period last year, mainly due to tax benefits enjoyed in the same period last year.

Prices of major products have declined, raw material prices have risen, and price spreads have narrowed. Main products: Pure MDI products: Demand was sluggish in the third quarter, inventory of downstream finished products was high, industry turnover intensified, and the average market price in the third quarter was around 19,500 yuan/ton. Aggregated MDI products:

Demand for refrigerators and freezers rose in the third quarter due to the trade-in policy. Demand in the construction market improved slightly, and the export market remained stable. The average market price in the third quarter was around 17,800 yuan/ton. TDI products: The inventory of raw materials and finished products in the home furnishing industry is high, and demand in the TDI market is weak. The average market price in the third quarter was around 13,500 yuan/ton. Soft foam polyether products: Demand in the home and automotive industry declined year-on-year in the third quarter, and the average market price of polyether in the third quarter was around 8,700 yuan/ton. Compared with the same period last year, the price of petrochemical products declined overall in the third quarter of 2024, and industrial chain profits also contracted. Main raw materials: Pure benzene: In the third quarter of 2024, the average price of pure benzene was 8,442 yuan/ton, an increase of 13.06% compared with the same period last year. Coal: In the third quarter of 2024, the average price of 5,000 kcal thermal coal was 752 yuan/ton, a decrease of 1.96% compared with the same period last year. In the third quarter of 2024, the average price of propane CP was 592 US dollars/ton, up 25.16% from the same period last year; the average price of butane CP was 577 US dollars/ton, up 24.35% from the same period last year.

Profit Forecasts, Valuations, and Ratings

We revised the 2024-2026 net profit of the company to be 162.05 (-10.28%), 209.51 (+2.7%), and 229.25 (+4.5%) billion yuan, respectively. The corresponding EPS was 5.16, 6.67, and 7.30 yuan/share, respectively. The PE corresponding to the current market value was 14.52X, 11.23X, and 10.26X, respectively, to maintain the “buy” rating.

Risk warning

There is a risk of sharp fluctuations in raw materials, insufficient demand affects sales volume and product prices, and the launch of new projects falls short of expectations.