Events:

On September 26, 2023, bonded Technology issued a preliminary announcement on the results for the first three quarters of 2023:

In the first three quarters of 2023, the company expects to complete the return net profit of 190 million yuan to 210 million yuan, an increase of 45.18% to 60.47% over the same period last year; it is expected to deduct the non-return net profit of 167 million yuan to 187 million yuan, an increase of 42.98% and 60.10% over the same period last year.

According to the company's semi-annual report data, 2023Q3 expects to complete the return net profit of 0.5 to 70 million yuan, an increase of 18.51 percent to 65.85 percent over the same period last year; it is expected to deduct the non-return net profit of 0.5 to 71 million yuan, an increase of 39.69 percent and 94.45 percent over the same period last year.

Main points of investment:

Logic continues to materialize, and Q3 performance is in line with our expectations.

In the third quarter, the company's performance still achieved rapid growth compared with the same period last year, mainly due to the continuous realization of the two rounds of "traditional logistics + intelligent logistics", the main business of liquefied warehousing. In terms of traditional logistics, the company has made more efforts to solicit goods, actively expand the variety of warehousing, strengthen the linkage of business plates, enhance the efficiency of resource integration, improve the utilization rate of warehousing, and the income of warehousing business has increased significantly compared with the same period last year. In the aspect of intelligent logistics, the company further extends the industrial chain service chain, expands the intelligent logistics service area and delivery variety, effectively improves the warehousing operation efficiency and customer service experience, and the intelligent logistics business income continues to increase.

Looking backward, there is still no obvious recovery in the demand of the chemical industry, and the operating rate of major chemicals has declined after rising moderately. As of September 25, the operating rate of ethylene glycol (made of petroleum) was 60.90%, which was lower than that of the same period last year and the lowest level in the same period of nearly five years. The operating rate of PX was 79.01%, which was a relatively low level in the same period of nearly five years. In this context, chemical warehousing may continue to benefit from passive storage. As of September 21, the ethylene glycol inventory level in Zhangjiagang was 584000 tons, the second highest in the same period of nearly five years. We expect that with the continuous promotion of the expansion category and extension chain strategy, the company's annual performance is expected to reach 253 million yuan, waiting for extension development or wisdom to further improve performance flexibility.

Capacity expansion is opened, and the company continues to be optimistic about its growth space.

On September 6, 2023, the company announced the signing of an equity acquisition intention agreement. Yangshan Shen Port, the target of its merger and acquisition, has one 100,000-ton wharf and three 5000-ton wharves, and its own storage tank capacity is 106.7 square meters. Calculated on the basis of 28.01% equity, this acquisition is expected to increase the tank capacity of bonded technology rights and interests by 26.98%, and is optimistic about the continued growth of production capacity. With the stricter supervision of the chemical logistics industry and the emergence of "consumption upgrading", the demand for safe, professional and efficient operation in the industry is increasing. Bonded technology, as a leading petrochemical warehousing enterprise in East China, is expected to benefit from it.

Short-term company expansion category to increase rental rates to cash in performance, profits continue to release, medium-term companies continue to accept mergers and acquisitions strategy to increase market share, and through the intelligent logistics platform to complete the flow of cash, is expected to quickly enhance the company's overall profitability, continue to be optimistic about the company's growth space.

Profit forecast and investment rating as the company's performance growth is in line with our expectations, we maintain our previous profit forecast. It is estimated that the operating income of bonded technology in 2023-2025 will be 1.197 billion yuan, 1.403 billion yuan and 1.596 billion yuan respectively, and the return net profit will be 253 million yuan, 309 million yuan and 343 million yuan respectively, and the corresponding PE is 17.58,14.40 and 12.97 times respectively. Maintain a "buy" rating.

Risks suggest production accidents, lower-than-expected demand, lower-than-expected growth of smart logistics business, lower-than-expected integration of mergers and acquisitions, goodwill impairment risks, major policy changes, and large-scale natural disasters.