Earnings declined in 2023. In 2023, the company achieved operating income of 7.050 billion yuan, -9.59% year-on-year; realized net profit to mother of 98.62 million yuan, a year-on-year decrease of 83.77%. We believe that the decline in the company's profits is mainly affected by changes in supply and demand in the industry. Prices of some products fell year on year, and gross margin decreased. The company plans to pay a cash dividend of 0.55 yuan for every 10 shares, with a cash dividend ratio of 30.67%.
Prices for some products have dropped. In 2023, the average annual price of the company's polycarbonate products was 12,000 yuan/ton, -19.51%; the average price of bisphenol A was 8,650 yuan/ton, -31.87%; the average price of phenol was 6,916 yuan/ton, -22.60%; and the average price of acetone was 5587 yuan/ton, +10.81% year-on-year.
Polycarbonate production and sales increased steadily year over year. In 2023, the company's polycarbonate production and sales volume was 142/136,000 tons, respectively, up 15.36%/15.24% year on year; production and sales of other major products were relatively stable, with production and sales of bisphenol A of 25.4/125,000 tons, respectively, of phenol production and sales of 50.3/278,000 tons, and acetone production and sales of 31.142,000 tons respectively.
Strengthen the construction of raw material production capacity and improve the integrated layout of the industrial chain. By the end of 2023, the company had a phenol and acetone production capacity of 700,000 tons/year, bisphenol A production capacity of 240,000 tons/year, and a polycarbonate production capacity of 130,000 tons/year, and the entire “phenol, acetone - bisphenol A - polycarbonate” industry chain layout. Relying on the existing industrial base, the company actively extends and strengthens the industrial chain. In 2023, the company's 100,000 tons/year high-purity dimethyl carbonate project and 600,000 tons/year PDH project were successfully put into operation to improve the independent supply of raw materials.
Projects under construction are progressing steadily to build a “propane-propylene-propane-propane-electrolyte solvent” new energy industry chain.
The company plans to invest 3,530 billion yuan to build a 300,000 tons/year direct oxidation propane oxide project using propylene produced by its own PDH project; at the same time, the company plans to invest 2.60 billion yuan to build a 250,000 tons/year electrolyte solvent project using self-produced propane oxide as raw material. According to the company's 2023 annual report, the propylene oxide project is being prepared for trial production. The electrolyte solvent project is under construction and installation, and is expected to be completed in 2024. Additionally, the company's 200,000 tons/year high-performance polypropylene project is expected to be completed in 2024.
Profit forecasting and investment ratings. We expect net profit attributable to mother in 2024-2026 to be 185 million yuan, 285 million yuan, and 367 million yuan respectively, EPS of 0.34, 0.52, 0.67 yuan, and BPS of 2024 of 15.93 yuan. Referring to comparable company estimates, according to the 2024 PB 1.0-1.1 times, a reasonable value range of 15.93-17.52 yuan (corresponding to 47-52 times PE in 2024), maintaining a “superior to market” rating.
Risk warning: Product prices fluctuate greatly; the polycarbonate industry chain boom declined; progress and profits of projects under construction fell short of expectations.