Report guide

The company released the report for the third quarter of 2023, realizing revenue of RMB 3.087 billion yuan in the first three quarters, with a year-on-year increase of 7.07%; net profit attributable to parent of RMB 296 million yuan, with a year-on-year increase of 13.62%; net profit deducted from non-parent of RMB 280 million yuan, with a year-on-year increase of 12.23%. Among them, Q3 realized revenue of RMB 1.006 billion yuan in a single quarter, with a year-on-year increase of 2.30% and a month-on-month increase of 0.33%; net profit attributable to parent was RMB 72 million yuan, down 7.33% year-on-year and 29.93% month-on-month; net profit deducted from non-parent was RMB 69 million yuan, down 4.70% year-on-year and 28.44% month-on-month. The results were slightly lower than expected.

Main points of investment

The price of main products is under pressure, and the profitability of Q3 of the Company has declined slightly year-on-year. We believe that it is mainly affected by the continuous low price of main raw materials during the period and the year-on-year adjustment of relevant product prices of the Company. Silicone 107 glue is the main raw material of the company. According to Baichuan Yingfu, the average price of 23Q3 is 14305 yuan/ton, down 29.7% year-on-year and 7.2% month-on-month. The sales volume of core products of Q3 Company's main business increased significantly, and the market share was further increased. Sales volume increased, but product prices were under pressure, and the company's Q3 revenue increased slightly year-on-year. The gross profit margin of Q3 Company was 20.53%, down 3.81PCT year-on-year and 4.41PCT month-on-month; the net interest rate was 7.16%, down 0.75PCT year-on-year and 3.12PCT month-on-month.

Q3 Company's financial expenses increased by about 15.27 million yuan month-on-month, which is expected to be affected by exchange gains. In the first three quarters, the net operating cash flow of the company was RMB 200 million yuan, an increase of RMB 126 million yuan on a year-on-year basis. In the first three quarters of the company, the inventory turnover rate was 4.82, down year-on-year, and the accounts receivable turnover rate was 3.10, up year-on-year. On October 29, the price of 107 glue was 15300 yuan/ton, which has rebounded by 13.3% compared with 13500 yuan/ton at the beginning of August. Under the support of raw material end, we expect the price of the company's products to pick up, thus driving the improvement of profitability.

A number of projects have been steadily promoted, and product volume can be expected in the future.

As of 23Q3, the company's projects under construction amounted to 465 million yuan, a slight increase year-on-year. According to China Daily, the company has a production capacity of about 160,000 tons of organic silicone, about 50,000 tons of polyurethane rubber, about 25,000 tons of other rubber and about 120 million square meters of solar back film.

On August 15, the company announced that it plans to invest 70.9 million yuan to build 26 million square meters of transparent grid backplane in Vietnam. In addition, Guangzhou 39,300 tons of electronic adhesive is expected to complete all equipment commissioning on December 31, 2013. The company's chip packaging plastic plate series products have been tested and applied in H company, ZTE, Xiaomi, Huichuan and other benchmark customers in the communication electronics, consumer electronics and automotive electronics industries. We believe that with the company's follow-up 39,300 tons of electronic glue project, lithium battery negative glue project and Vietnam's 26 million square meters of backplane gradually increased, the company is expected to accelerate growth in the future.

Profit forecast and valuation

Due to the continuous low level of raw materials and the pressure on the prices of relevant products of the Company, the net profit attributable to the parent company in 23-25 was reduced to RMB 3.33/452/555 million Yuan, and the corresponding EPS was RMB 0.59/0.81/0.99 Yuan/share. We believe that with the orderly production of new production capacity of the Company, the Company's photovoltaic glue, electronic glue, transportation equipment glue and other industries are developing rapidly, and the Company's future development can be expected and the purchase rating can be maintained.

Risk hint

Product price fluctuations; customer development is less than expected; production capacity is less than expected, etc.