Events:
On October 25, 2023, Tongcheng Xincai released three quarterly results: in the first three quarters of 2023, the company realized operating income of 2.196 billion yuan, + 18.89% year-on-year; net profit of 350 million yuan, + 45.57%; and non-return net profit of 325 million yuan, + 70.00% over the same period last year. The gross profit margin of sales was 23.96%, unchanged from the same period last year; the net profit margin of sales was 15.79%, an increase of 3.36pct over the same period last year.
2023Q3, the company achieved operating income of 826 million yuan, year-on-year + 23.20%, month-on-month + 17.33%; net profit of 127 million yuan, + 124.55%, month-on-month; and non-return net profit of 104 million yuan, + 100.68% and-25.71%, respectively. The gross profit margin of sales was 22.99%, which decreased by 0.79pct and 1.54pct compared with the same period last year; the net profit margin of sales was 15.92%, which increased 7.64pct and decreased 3.28pct compared with the same period last year.
Main points of investment:
Downstream prosperity continued to improve, 2023Q3 performance increased 2023Q3, the company achieved operating income of 826 million yuan, year-on-year + 23.20%, month-on-month + 17.33%; realized home net profit of 127 million yuan, + 124.55%, month-on-month-9.29%.
2023Q3, under the background of the rising domestic and foreign demand for downstream tires, the sales of special rubber auxiliaries for the company's main products continue to increase, with sales of 38500 tons per quarter, + 24.21% year-on-year and + 12.66% compared with the same period last year. At the same time, the electronic materials sector, with the continuous release of mature products and the increase of new products, electronic materials sales of 3400 tons, year-on-year + 37.82%, month-on-month + 26.82%.
However, in the context of the rising price of phenol in the upstream, although the unit price of special rubber auxiliaries has increased, the price gap has narrowed, and the 2023Q3 comprehensive gross profit margin has declined slightly to 22.99%, reducing 0.79pct from the same period last year and 1.54pct from the previous year.
In terms of fees, 2023Q3, the company's sales / management / financial expense rates are 2.99%, 5.71% 1.95%, 0.81%, 1.24%, 0.40%, 0.26%, 0.86%, 1.33%, respectively.
High-end photoresist has made rapid progress, and electronic materials are expected to continue to increase the volume of the company's electronic materials business plate. In terms of semiconductor photoresist, G-line, I-line and Krf photoresist have all completed the production of goods. At the same time, the company also distributes upstream resin to further solve the problem of upstream supply chain. In terms of panel photoresist, as of the first half of 2023, Beixu Dianzi ranked as the largest domestic supplier, accounting for more than 50% of the largest panel customer in China, and has been officially mass-produced and sold to H customers in two factories and CH customers; at the same time, T customers and other introduction and testing work has made phased progress. With the formal production of 11000 tons of semiconductors, photoresist for flat panel display and 20,000 tons of related supporting projects in the third quarter, the company is expected to continue to sell volume in this field.
Earnings forecast and investment rating are based on the company's performance in the first three quarters, we adjust the company's profit forecast, and expect the company's 2023-2025 return net profit to be 4.79,5.17 and 582 million yuan, respectively, with a corresponding PE of 41,38 and 34 times, maintaining the company's "buy" rating.
Risk indicates the risk of decline in product demand caused by macroeconomic fluctuations; product verification is not as expected; product prices fall sharply; raw material price fluctuations risk; industry competition intensifies the risk.