The company announced third-quarter results: Q3 achieved revenue of 17.118 billion yuan, +22.8%/+33.3% YoY, net profit of 0.303 billion yuan to mother, +1886.4%/+9.8% YoY. In the first three quarters, the company achieved revenue of 40.465 billion yuan, yoy +18.0%, net profit due to mother 0.683 billion yuan (not 0.635 billion yuan after deduction), and yoy +41.0% (after deducting yoy +84.3%). The company's third-quarter results were in line with our forward-looking expectations (0.3 billion yuan). It is expected that with the release of downstream demand and the correction of price spreads for petrochemical products, there is still room for improvement in the company's 25-26 performance. Maintain an “Overweight” rating.

Production and sales improved year-on-year in the first three quarters, and gross margin was under pressure due to increased competition in the industry, benefiting from demand driven by downstream equipment updates, trade-in, etc., as well as an increase in the company's global market share. Production and sales in various business segments of the company increased year on year. In the first three quarters, the company's modified plastics/green petrochemical/new materials sector achieved sales volume of 1.769/1.018/0.164 million tons, a year-on-year change of +20%/+3%/+32%; revenue of 22.4/7.5/2.5 billion yuan, a year-on-year change of +15%/+13%. The company's comprehensive gross margin for the first three quarters was -1.5pct to 12.2% year on year; the expense ratio for the period was -0.2pct to 10.5% yoy. It is expected that with the release of downstream demand, there is still room for improvement in the overall performance of the company.

Production and sales grew steadily in Q3. Under pressure from the petrochemical sector, the 24Q3 modified plastics/green petrochemical/new materials sector achieved sales volume of 0.68/0.47/0.07 million tons respectively, a year-on-year change of +8%/+16%/+41%, and a month-on-month change of +11%/+40%/+24%; realized revenue was 8.5/3.5/1 billion yuan, with year-on-year changes of +8%/+29%/+19%, month-on-month changes of +6%/+39%/+39%. Sales in the green petrochemical sector of the company grew rapidly in the third quarter, mainly due to a decline in the production capacity of Ningbo Jinjin PDH installations and the participating company, Liaoning Golden ABS resin. The ABS business in Liaoning Gold is still in a state of loss. Along with the increase in ABS sales, losses in Liaoning Gold have increased, which has affected the company's performance to a certain extent.

New materials continue to develop to solve the pain points of humanoid robots and the low-altitude economy. The company continues to develop new materials. The products developed by the company, such as special engineering plastics and carbon fiber-reinforced composites, can be used in various fields such as humanoid robots, drones, and flying cars. With the development of emerging industries such as downstream robotics, low-altitude drones, and AI, as well as the company's new PPSU and LCP production capacity, the company's specialty engineering plastics and new materials business is expected to continue to grow.

Profit forecasting and valuation

We maintain our profit forecast. We expect the company's net profit to be 0.96/1.41/1.88 billion yuan for 24-26, with year-on-year growth rates of +203%/+47%/+33%, respectively, and corresponding EPS of 0.36/0.54/0.71 yuan. A comparable company was selected as a reference to the consistent wind forecast average of 18xPE in 2025, and the company was given 18xPE in 2025, with a target price of 9.73 yuan (previous value 7.56 yuan) to maintain the “gain” rating.

Risk warning: the risk of falling downstream demand, and the risk that the commissioning of new projects will not meet expectations.