According to the company's annual report for 2022, the operating income in the first half of the year was 665 million yuan, an increase of 60.56% over the same period last year; the net profit returned to the mother was 191 million yuan, an increase of 30.23% over the same period last year; of which the company realized operating income of 336 million yuan in the second quarter, an increase of 52.10% over the same period last year and an increase of 2.16% over the same period last year; the net profit from the home was 96 million yuan, an increase of 25.44% over the same period last year and-0.12% over the same period last year. The company's sales gross profit margin was 29.82% in the second quarter, down 11.32pct from the same period last year and 5.39pct from the previous quarter. The price of trimethylchlorosilane, the raw material, rose sharply in the second quarter, which put pressure on the company's performance in the second quarter. Q3 is expected to repair the company's profitability as raw material costs fall.
The epidemic in the second quarter disturbed the cost of raw materials and the pressure on production and sales. In the first half of the year, affected by the epidemic, the price of trimethylchlorosilane continued to rise. according to the company announcement, the average purchase price of trimethylchlorosilane H1 was 38500 yuan / ton, an increase of 156.67% over the same period last year. According to Baichuan Yingfu data, the average price of trimethylchlorosilane (Zhejiang) was 539,000 yuan / ton, up 32.13% from the previous quarter. In terms of production and sales, functional auxiliaries remained stable in the second quarter, with sales of 3028 tons, an increase of 22.79% over the same period last year, and a month-on-month increase of-7.13%. Phenylchlorosilane achieved sales of 504 tons, an increase of-28.11% over the same period last year, and an increase of-28.74% over the same period last year. Sales are obviously under pressure, a drag on overall performance. The company is actively expanding the application of silicone products such as silazane, vinyl double seal and phenyl in the new energy, LED, electronics and medical markets. With the reduction of raw material costs in the second half of the year, the profitability of the superimposed phenyl silicone resin and intermediate project is expected to be repaired.
Layout the second production base and enrich the product matrix. On June 22, 2022, according to the company announcement, the company intends to establish Hubei Xinyaqiang Silicon material Co., Ltd. (80% shareholding) by joint venture with Hubei Xingrui Silicon material Co., Ltd., and plans to invest 800 million yuan to build an annual output of 50000 tons of silicone materials and high purity functional auxiliaries. The main products include 17000 tons of hexamethyldisiloxane (including 2000 tons of electronic grade), 5000 tons of hexamethyldisiloxane, 4200 tons of tetramethyldivinyldisiloxane, 1880 tons of dimethyl vinyl chlorosilane, 3000 tons of bis-trimethylsilylamine lithium and 3000 tons of di-tert-butyl dicarbonate. The project landed in Yichang New material Industrial Park of Xingfa Group, which effectively ensured the supply of hexamethyldisilazane, raw material and trimethylchlorosilane, and at the same time, the new production capacity was built on the basis of consolidating the existing capacity advantages, enriching the company's product matrix.
Maintain earnings forecasts and maintain "buy" ratings. With the improvement in the cost of raw materials and the commissioning of phenyl and downstream deep processing projects, we expect to achieve a net profit of 4.01and5.03 / 607 million in 2022-2024, corresponding to PE of 18,14x and 12x respectively, maintaining a "buy" rating.
Risk tips: product prices fall; projects under construction are not as expected; demand decline risk.