Event description
The company released 2023Q3 quarterly report that revenue in the first three quarters of 2023 reached 550 million, up 14.9% from the same period last year; net profit from home was 37 million, down 11.3% from the same period last year; and 33 million was deducted from net profit from non-home, up 19.6% from the same period last year. In the third quarter alone, revenue reached 216 million, an increase of 22.9% over the same period last year, an increase of 13.5% over the same period last year; net profit from home was 18 million, down 15.2% from the same period last year, an increase of 12.5% over the previous year; and net profit from non-return was 15 million yuan, up 79.5% from the same period last year and 8.7% from the previous year.
Event comment
Revenue and sales continue to grow positively, and the trend of performance optimization is improving. In terms of revenue, revenue growth in the first three quarters of 2023 was 14.9% year-on-year, respectively. Revenue growth of 2023Q3 was 22.9% year-on-year, an increase of 13.5% month-on-month, mainly due to the continuous increase in polylactic acid resin sales. In terms of profit, 2023Q3 net profit decreased by 15.2% compared with the same period last year, up 12.5% from the previous year, and net profit deducted from the same period last year increased by 79.5%. The main reason for the decrease in net profit over the same period last year was the large amount of government subsidies in the same period last year. From an operational point of view, deducting non-net profit increased significantly. The company's performance continues to improve month-on-month, and the long-term development trend is good.
The price of polylactic acid goes down, "price for volume" to expand market share. Affected by the intensified competition in the polylactic acid industry and the slow recovery of downstream consumer market demand since 2023, foreign manufacturers have adopted a low-price strategy to enter the Chinese market, and the import price of polylactic acid has dropped by 10-15% compared with the same period last year. In order to actively seize the market, the company adjusted the product price to a certain extent. at the same time, the company maintained a relatively stable profitability through cost reduction, efficiency and product structure optimization. The gross profit margin and net profit margin in the first three quarters of 2023 were 14.12% and 6.78% respectively, an increase in 0.38pct/0.76pct compared with the first half of the year. In the first half of 2023, the company's output of pure polylactic acid resin increased by 35.75% over the same period last year; the output of composite modified polylactic acid resin decreased by 32.09% compared with the same period last year, and total resin sales increased by 23% compared with the same period last year.
The policy supervision has not been reduced, and the project of raising 150000 tons of investment is progressing smoothly. In the first half of 2023, the Ministry of Commerce and the Development and Reform Commission issued the measures for the Administration of the use and reporting of Disposable plastic products by Business operators, which made very specific and clear provisions on the norms, market supervision and legal liability of business operators. Since June 20, the intensity of market supervision has increased rather than decreased, and there is a lot of room for long-term development. The company is the first company in China to break through lactide and achieve PLA mass production, with a design capacity of 45000 tons, the second phase of subsidiary Hainoer 20,000 tons of polylactic acid production line has been completed trial production, began to put into operation, IPO annual output of 150000 tons of polylactic acid project part of the building monomer has been capped, the project is still under construction, is expected to be completed and put into production in the second half of 2024.
Investment suggestion
From 2023 to 2025, the company is expected to achieve revenue of 7.93,11.35 and 1.615 billion yuan respectively, an increase of 31.0%, 43.0% and 42.4% over the same period last year. Realized net profit of 0.57,0.80 and 112 million yuan, up 20.3%, 40.7% and 41.2% over the same period last year, corresponding to EPS 0.28,0.39 and 0.55 yuan respectively, corresponding to the company's closing price on October 26, 2023, PE was 46.8,33.3 and 23.6 times respectively from 2023 to 2025. Due to the continued improvement of the company's business, profitability improved significantly compared with the previous year, and the company's rating was upgraded to "overweight-A" rating.
Risk hint
The risk of rising raw materials, the risk of capacity expansion less than expected, the risk of intensified market competition, the risk that the company's business expansion is greatly affected by downstream demand, and the risk that policy implementation is not as strong as expected.