Description of the event
The company released its three-quarter report for 2023, achieving revenue of 2.20 billion yuan (+18.9% year-on-year), attributable net profit of 350 million yuan (+45.6% year-on-year), and attributable non-net profit of 330 million yuan (+70.0% year-on-year). Among them, Q3 achieved revenue of 8.3 billion yuan in a single quarter (+23.2% yoy, +17.4% yoy), realized imputed net profit of 130 million yuan (+124.5%, -9.5% month-on-month), and realized imputable non-net profit of 100 million yuan (+100.7% yoy, -26.2% yoy).
Incident comments
Production and sales of rubber additives have increased, China Strategy Rubber's performance has been impressive, and investment returns have increased dramatically. In the first three quarters of 2023, the sales volume of the company's special rubber additives was 105,000 tons, +16.4%, and the production and sales rate reached 100.2%, achieving revenue of 1.68 billion yuan, +7.0%; at the same time, the average purchase price of the core raw material phenol was 6887 yuan/ton, -25.4%, and the price of raw materials fell. The price of the company's special rubber additives products also declined, with an average price of 15,979 yuan/ton, -8.0% year on year. In the third quarter of 2023, the company's special rubber additives sales volume was 39,000 tons, a significant increase of 12.7% over the previous month. In terms of investment income, the tire company with 8.9% of the company's equity participation, and the tire boom rebounded, and the tire boom improved markedly. In the first three quarters of 2023, the company achieved net investment income of 204 million yuan, +39 million yuan over the previous year.
Electronic materials continue to make breakthroughs, and photoresists are growing rapidly. In the first three quarters of 2023, the company's electronic chemicals sector achieved revenue of 400 million yuan, a significant increase of 56.7% over the previous year. In terms of semiconductor photoresists, as of the end of half year 2023, the company's semiconductor photoresist sales revenue was 82.58 million yuan, which is basically the same as the same period last year. Thanks to the continued volume of mature photoresist products and the increase in new products, the growth rate of KrF photoresist reached 52.6%, and the growth rate of ICA photoresists in I-line photoresists reached 96.8%, and the sales revenue of new products in the semiconductor photoresist business reached 41.4%. In terms of photoresist, as of the end of the half year of 2023, Beixu Electronics achieved sales revenue of 132 million yuan, an increase of -3.5% over the previous year; the sales volume of panel photoresist products increased 9.6% year on year, and the domestic market share was about 21.5%, ranking as the largest supplier in the country. As a localized supplier, Beixu Electronics has stable product quality and an innate advantage in stable supply. Among them, Beixu products account for more than 50% of BOE, the largest panel customer in China. With the expansion of sales of Halftone products, the share will increase further.
In terms of new customer development, formal mass production and sales have been made to H customer's two factories and CH customers; at the same time, the introduction testing work for T customers and others has made phased progress, and it is expected that mass production and sales will be achieved one after another. In terms of photoresist resins, the company's LCD panel ArrayHalf-tone photoresist phenolic resin was successfully mass-produced and received approval from end customers; high-resolution photoresist phenolic resin mass production products entered production line testing; OLED photoresist phenolic resins entered the development stage; several G/I line phenolic resins were in the trial/large trial stage; and development of advanced I-line photoresist phenolic resins made phased progress.
The photoresist factory in Shanghai continues to advance. Shanghai Tongcheng Electronics Jinshan Plant has partially built an 11,000 tons/year photoresist production line and a 20,000 ton/year EBR line, and entered the trial production preparation stage at the end of half a year. The products cover high-end photoresist such as semiconductor photoresist, panel glue, panel color glue, EBR and other supporting products. The Shanghai photoresist factory is about to release products, which is expected to contribute to increased performance.
Maintain a “buy” rating. The company is a domestic leader in special rubber additives and photoresists. Special rubber additives repair the boom in photoresists, and photoresists continue to break through. The estimated net profit attributable to the company in 23-25 was 4.7, 570 million yuan, and 7.2 billion yuan respectively, maintaining the “buy” rating.
Risk warning
1. The recovery in downstream demand fell short of expectations;
2. The progress of the new project is lower than expected.