Key points of investment
Incident: The company released its 2023 semi-annual report, achieving revenue of 4.304 billion yuan, an increase of 6.50% over the previous year; net profit of Gimu was 503 million yuan, an increase of 1.94% over the previous year. 2023Q2's quarterly revenue was 2,246 million yuan, up 2.67% year on year, up 9.16% month on month; net profit of KIMU was 275 million yuan, up 1.58% year on year, and 20.65% month on month.
The electronic chemicals and carbon reduction business continued to grow, and high-end manufacturing chemical materials remained stable. In the first half of 2023, high-end manufacturing chemical materials, high-end fluorine materials, electronic chemicals, engineering technology services, trade and other businesses achieved revenue of 1,664 million yuan, 866 million yuan, 409 million yuan, 755 million yuan, and 622 million yuan respectively, compared to -1.26%, -24.34%, +14.60%, +34.99%, and +92.44%, respectively. Sales of various products such as polyurethane products, special coatings, nitrogen trifluoride, rubber sealing profiles, and organic transparent materials increased by more than 10% year-on-year. The decline in revenue in the high-end fluorine materials sector was mainly due to the decline in the prices of polytetrafluoroethylene resin and fluorine rubber products. In the first half of 2023, the average prices were 36,000 yuan/ton and 104,400 yuan/ton, respectively, down 10.90% and 38.36%, respectively, from the previous year, while the gross profit side of the high-end fluorine materials sector increased 8.7% year-on-year.
The company plans to acquire Sinochem Blue and raise supporting capital to improve the layout of the fluorine chemical industry chain. On August 15, 2023, the company announced that it intends to purchase 52.81% and 47.19% of Sinochem Blue Sky's shares from Sinochem Group and Sinochem Asset Issuance Shares, respectively. The transaction price is 7.244 billion yuan. In addition, supporting funds were raised for the construction of projects such as the “New 20,000 tons/year PVDF Project”, the “200,000 tons/year lithium-ion battery electrolyte project (phase I),” the “annual output of 19,000 tons of VDF, 15,000 tons of PVDF, and supporting 36,000 tons of HCFC-142b raw material project (phase II)”, as well as supplementary liquidity or debt repayment. This restructuring will enable Haohua Technology to form a complete fluorine chemical industry chain, and the product matrix will be further expanded and enriched.
Investment suggestions: The company's core business serves national core industries such as integrated circuits and civil aviation. Product development and achievement transformation capabilities are constantly improving, and active capital expenditure guarantees rapid growth. Since the transaction has not yet been completed, we are not considering the merger of Sinochem and Blue Sky. We maintain the company's net profit forecast for 2023-2025 at 1,283, 15.50 billion yuan, and 1,859 billion yuan, and maintain the “increase in holdings” rating.
Risk warning: The risk that the company's project construction is slower than expected; the risk of fluctuations in raw material prices; the risk of increased competition in the industry.