Yueyang Xingchang released the third quarter results report: in the first three quarters of 2024, the company achieved total revenue of 2.919 billion yuan, an increase of 29.59% over the previous year; net profit to mother was 0.072 billion yuan, or -1.52% year-on-year. The 2024Q3 company achieved revenue of 1.027 billion yuan in a single quarter, up 21.80% year on year, down 3.10% month on month; realized net profit to mother 0.019 billion yuan, down 12.58% year on year and 38.24% month on month.

Key investment points

Revenue increased year over year, and profit fell short of expectations

In the first three quarters of 2024, the company's overall business situation progressed steadily. New products were put into operation one after another, and total operating income increased year-on-year, but net profit to mother did not increase by the same amount during the same period. The main reason is that high-end polyolefin products produced by its subsidiary Huizhou Development are still in the marketing stage, and the gross margin is lower than other products, so the company's profit falls short of expectations. Considering that the company is the only domestic enterprise that has mastered the full process technology of metallocene and domestic import substitution needs, the gross margin of the company's high-end polypropylene products is expected to return to a reasonable level. At present, the company's Huizhou Phase II project has already started. It is expected that the first phase of the 0.3 million-ton high-end polyolefin project will be produced incrementally next year, which will become a new growth pole for the company's performance and future development.

Special epoxy resin may be launched

In September, the company announced the establishment of a new company, Guangzhou Lineng New Materials, whose business scope covers high-performance fibers and synthetic resins. The company's high-performance special epoxy resin project in collaboration with Professor Tang Kewen's research group at Hunan University of Technology may be injected into the new Guangzhou company.

The company's special epoxy resin project aims to localize and replace semiconductor packaging materials in China, and has now entered the customer sample delivery stage.

MOFs are in the pilot phase, and multiple application scenarios are being explored

At present, the company has built a pilot production line for MOFs materials and has produced pilot products. The products have now been used in its Hunan Litai VOCs treatment catalysts and adsorbents. Currently, the company is exploring more application scenarios according to customer customization needs.

Thanks to the good passability of MOFs materials, MOFs can theoretically be used as a solid-state battery electrolyte, which can effectively increase battery ion transfer rate and inhibit dendrite growth. In addition, many academic studies have proven that MOFs can be used to electrolyze seawater to produce hydrogen and extract uranium from seawater. As more application scenarios are explored, the company's MOFs products are expected to accelerate industrialization.

Profit forecasting

It is predicted that the company's net profit for 2024-2026 will be 0.12, 0.144, and 0.174 billion yuan, EPS will be 0.33, 0.39, and 0.47 yuan, respectively. The PE corresponding to the current stock price will be 58.9, 49.2, and 40.7 times, respectively, maintaining the “increase” investment rating.

Risk warning

Crude oil prices fluctuated greatly, terminal demand fell short of expectations, and the company's project progress fell short of expectations.