Introduction to this report:
The company's 24Q1 performance was in line with expectations. Considering the company's strong growth, it maintained an increase in holdings rating.
Key points of investment:
Maintain an “Overweight” rating. The company's Q1 performance was in line with expectations, maintaining an EPS of 2.18/2.67/2.93 yuan for 24-26. Referring to comparable company valuations and company growth, the company was given 16 times PE in 24 years, and the target price was raised to 34.94 yuan (originally 32.76 yuan).
24Q1 results are in line with expectations. In the first quarter of '24, the company achieved operating income of 7.978 billion yuan (+31.80% YoY, +0.81%) and net profit to mother of 1.06 billion yuan (+36.30% YoY, +64.24%). In terms of profitability, Q1 gross margin was 21.89% (+1.71 pct year on year, +4.12 pct month on month); Q1 net margin was 14.25% (+1.36 pct year over year, +5.43 pct month on month). The month-on-month increase was due to an increase in gross margin. In terms of cash flow, 24Q1 achieved a net cash flow of 1,131 billion yuan from operating activities, achieving a net present ratio of 106%. According to the official account of Hualu Group, in the five months since the Jingzhou base was put into operation, the average daily revenue was 20 million yuan and profit of 4.55 million yuan, corresponding to quarterly revenue of 1.8 billion yuan and profit of 410 million yuan.
The first phase of production in Jingzhou was put into operation, and production and sales increased dramatically. 24Q1 sold 2.11 million tons of products, +45% year over year and +7% month over month. In terms of breakdown, products in the fertilizer, organic amine, acetic acid and derivatives and new materials sector sold 106, 14, 37, and 540,000 tons respectively, compared with +43%, +13%, +144%, and +24%, respectively. The increase in acetic acid was most obvious. The increase in acetic acid was most obvious, mainly due to Jingzhou's high acetic acid production capacity in Phase 1, which was 1 million tons/year.
The second phase of Jingzhou started construction and is expected to be put into operation by the end of '24. The first phase of the company's Jingzhou base project was successfully put into operation in '23, and construction of the second phase of the project has now begun, including integrated BDO, NMP, melamine resin monomer material projects, and optimization and upgrading of melamine resin monomer materials and products.
Risk warning: The risk of projects under construction falling short of expectations, and the risk of safety accidents occurring.