Event: The company released the three-quarter report for 2023. 23Q1-3 achieved revenue of 4.936 billion, -23.1%, net profit of 404 million, -48.0%, gross profit margin of 17.5%, year-on-year -5.7pct; single Q3 revenue of 1,729 billion, -30.3%, +6.0%, net profit of 78 million yuan, -75.6%, and -56.2% month-on-month, gross margin of 19.5%, y-7.9pct, +2.9pct month-on-month.
Business analysis:
The company's net profit declined year-on-year in the first three quarters, mainly due to the decline in EVA particle prices in 2023. According to Soby Consulting, the average price without tax for EVA particles in 2022 was 21,300 yuan/ton, and the average price without tax from January to October 2023 was 14,600 yuan/ton, a relative decline of 31%.
The company's net profit declined month-on-month in Q3, mainly due to fluctuations in period expenses (the period fee rate increased by 2.8pct to 15% over month) and other revenue effects (Q2 160 million, Q3 0.3 billion).
Looking ahead to the follow-up: Traditional areas:
(1) The EVA particle production expansion cycle requires more than 3 years, yet the new EVA production capacity this year and next two years is relatively limited, and demand growth for PV installations is expected to remain relatively high. Therefore, it is expected that the future EVA supply and demand pattern will improve relatively, thereby repairing the company's profitability.
(2) In addition, the company actively lays out POE business and plans to build 300,000 tons/year POE projects (phase I 100,000 tons, phase II 200,000 tons), the first phase of which is expected to be completed and put into operation in 2025. After production is put into operation, the company will own EVA and POE photovoltaic film products to enhance its core competitive advantage and enhance the company's performance.
The multi-product project is about to be put into operation, and is expected to contribute to a 24-year increase: 20,000 tons/year UHMWPE, 3,000 tons/year lithium battery additives, 100,000 tons/year lactic acid - 40,000 tons/year PLA, 10,000 tons/year electronic special gas, etc., to further expand the company's product matrix and improve the overall profit level.
Profit forecast and investment rating: Considering price fluctuations in the photovoltaic industry, particle profit declined sharply. We downgraded the company's performance. It is estimated that net profit of 5.1/10.1/130 billion yuan will be 5.1/10.1/130 billion yuan in 23-25 (previous forecast value of 11.3/15.0/1.89 billion), -42%/+100%/+29% over the same period last year. The current stock price corresponding to PE is 51.7/25, respectively.
9/20.1 times, downgraded to the “Overweight” rating.
Risk warning: industry demand falls short of expectations; market competition intensifies; upstream raw material prices fluctuate; production capacity progress falls short of expectations, etc.