Description of the event

The company released its three-quarter report for 2024, achieving operating income of 147.604 billion yuan, an increase of 11.35% over the previous year; net profit to mother of 11.093 billion yuan, a year-on-year decrease of 12.67%.

Incident reviews

Raw materials rose year-on-year, and net profit to mother declined in Q3. The company's Q3 revenue was 50.537 billion, up 12.48% year on year and down 0.73% month on month; net profit to mother was 2.919 billion yuan, down 29.41% year on year and 27.33% month on month. Prices of major products declined year on year. Downstream demand for polyurethane was weak in the third quarter of 2024, and prices of some products showed a downward trend; in the third quarter of 2024, the overall focus of petrochemical product prices declined compared to the same period last year, and industry chain profits also contracted. At the same time, the price of main raw materials rose year on year. According to Baichuan, the average price of pure benzene in the first three quarters was 8,502 yuan/ton, up 13.46% year on year.

Sales of polyurethane and new materials are growing steadily. The company achieved revenue of 54.245 billion yuan in the polyurethane series business in the first three quarters, +8.32% year over year, sales volume of 4.1 million tons, or +14.21%; achieved petrochemical series revenue of 61.978 billion yuan, +19.49% year over year, sales volume 4.07 million tons, down 58.76% year on year; achieved fine chemicals and new materials business revenue of 19.9991 billion yuan, up 13.68% year on year, with sales volume of 1.42 million tons. The year-on-year increase was 21.37%.

Propane prices continued to be high, and costs increased slightly during this period. According to Baichuan Yingfu, the average price of 24Q3 Qinhuangdao thermal coal Q5500 was 854 yuan/ton, -0.42% month-on-month, propane was 5,257 yuan/ton, +1.2% month-on-month, butane was 5,300 yuan/ton, -0.8% month-on-month, and pure benzene was 8502 yuan/ton, -5.93% month-on-month. The company's gross margin for the first three quarters was 15.38%, down 1.38pct year-on-year. The cost rate for the period was 5.6%, an increase of 0.47 pct over the same period last year.

Investment advice

The company's net profit for 2024-2026 is estimated to be 14.32, 15.745, and 18.768 billion yuan respectively, EPS is 4.56/5.01/5.98 yuan, and the corresponding PE is 17.5/15.9/13.3X, respectively, maintaining a “buy-B” rating.

Risk warning

The macroeconomic recovery fell short of expectations, product prices fell, and raw material prices rose.