Key points of investment
Incidents: In the first three quarters of 2022, the company achieved operating income of 545 million yuan, an increase of 12.08% over the previous year; net profit of returned mother was 116 million yuan, an increase of 13.09% over the previous year; after deducting net profit of 105 million yuan, an increase of 11.44% over the previous year.
Revenue grew steadily in the first three quarters, and Guimu's net profit performance was good. In the first three quarters of 2022, the company achieved operating income of 545 million yuan, an increase of 12.08% over the previous year; Guimu's net profit was 116 million yuan, an increase of 13.09%; the third quarter of 2022 alone achieved revenue of 181 million yuan, a year-on-year decrease of 2.01%, an increase of 11.98%; Guimu's net profit was 32.7997 million yuan, a year-on-year decrease of 25.05%, an increase of 24.14% over the previous year. The company's current electronic specialty gas orders are full. It is expected that with the delivery and receipt of 48 million yuan of high-purity xenon orders announced on July 28 and the 143 million electronic specialty gas orders announced on September 17, it is expected that the growth rate of performance will accelerate.
Profitability continues to increase, and cost control is being strengthened. 1) Profitability increased compared to the same period last year.
Gross sales margin for the first three quarters of 2022 increased 1.34pct to 44.46% over the same period last year, and net sales margin increased 0.48pct to 21.41% over the same period last year. 2) Increased cost control. The cost rate for the first three quarters of 2022 decreased by 2.38pct to 22.14% compared to the same period last year. The sales, management, R&D, and financial expenses ratio was +0.11pct, -1.6pct, -0.56pct, and -0.35pct to 4.14%, 10.66%, 5.80%, 1.53% compared to the same period last year.
The company is a leading liquid carbon dioxide enterprise in China and has multiple advantages in channel customer source production capacity. 1) The exhaust recycling process binds large central enterprises with significant channel advantages. The raw gas comes from exhaust gas recovery from large-scale upstream petrochemical plants, which has both stable gas sources and cost advantages; 2) High quality products are widely recognized by food, beverage and industrial customers. The company is a strategic supplier of Coca Cola and Pepsi in China, covering high-quality and stable customer sources for well-known food and beverage and industry customers; 3) Production capacity continues to expand and deeply expand into the Southern Market. Jieyang has a new carbon dioxide recovery plant with an annual production capacity of 560,000 tons of carbon dioxide. The first phase has a new carbon dioxide recovery plant with a deep layout in the southern region.
The specialty gas business is growing rapidly, and multiple guarantees are driving the company's new growth period. 1) Continuously fill the specialty gas categories. The Yueyang electronic specialty gas project includes high-purity carbon dioxide, helium-neon-krypton, xenon rare gases, laser blends, etc. The Yizhang project includes high-purity hydrogen chloride, hydrogen fluoride, hydrogen bromide, etc. 2) Improve the guarantee of self-sufficiency of raw materials. The 90,000Nm3 rare gas extraction unit in Baling is scheduled to be put into operation in 2023Q2 to gradually achieve self-sufficiency in rare gas raw materials. 3) Accelerated promotion of customer certification & order volume: A number of electronic specialty gas products have been certified by French Liquid Air and ALCOHOL. In 2022 M1-9, the company's cumulative total sales of electronic specialty gas orders reached 257 million yuan, about 13 times the order amount for the full year of 2021. The rapid growth rate is driving the company's new growth period.
Profit forecasts and investment ratings: Leading food-grade carbon dioxide companies, and the strong growth momentum of electronic specialties has become the company's new growth pole. We expect the company's net profit to the mother in 2022-2024 to be 2,28/364/507 million yuan, respectively, up 64%/60%/39%, and EPS of 0.37/0.58/0.81 yuan respectively, corresponding to 50/31/22 times PE (valuation date 2022/10/30), maintaining the “buy” rating.
Risk warning: downstream demand falls short of expectations, project development falls short of expectations, risk of market price fluctuations