Key points of investment:

The company released its 2023 annual report: During the reporting period, the company achieved revenue of 1,835 million yuan (YoY +19%), achieved net profit attributable to mother of 320 million yuan (YoY +36%), and achieved net profit of 309 million yuan (YoY +39%) after deduction. In 2023, the company's comprehensive gross profit margin was 35.06% (YOY-3.21pct), net profit margin 17.42% (YOY+1.96pct), and sales, management and financial expenses ratio 11.51% (YOY-1.54pct).

The company's performance increased significantly year-on-year in 2023. The main reasons are: 1) the new electronic bulk gas projects in the early stages were supplied one after another, driving steady growth in performance; 2) the company continued to increase its helium market development efforts, and sales continued to grow. In the 23Q4 single quarter, the company achieved revenue of 480 million yuan (YoY -7%, QoQ +4%), achieved net profit of 93 million yuan (YoY -21%, QoQ +36%), and achieved net profit after deduction of 88 million yuan (QoQ +35%). The single-quarter results improved significantly. The company's comprehensive gross profit margin for the 23Q4 quarter was 30.70%, with year-on-month changes of -7.35pct and -1.06pct, net profit margin 19.48%, and year-on-month changes of -3.41pct and +4.7pct, respectively. In terms of expenses, 23Q4 sales, management, and R&D expenses were 0.09 billion yuan, 0.60 million yuan, and -0.07 billion yuan, respectively (23Q3 was 0.11, 0.34, and 0.2 billion yuan). In addition, changes in income tax expenses (-021 million yuan) in 23Q4 increased single-quarter profits. At the same time, the company announced its 2023 profit share plan. It plans to distribute a cash dividend of 0.76 yuan (tax included) to all shareholders for every 10 shares, no capital increase, and no bonus shares.

The gas supply for early electronic bulk gas projects has driven steady growth in performance, and it is expected that the company will fully benefit from a new round of downstream capital expenditure. During the reporting period, the company successfully obtained electronic bulk gas projects such as Xi'an Xinxin, Guangzhou Zengxin, Guangzhou Guangxin, Shenzhen Saifa, and Beijing Xilex, which consolidated the company's leading position in the field; at the same time, it actively promoted the continuous construction and commercialization of electronic bulk gas stations for various key projects such as the Hefei Comprehensive Insurance Zone, Hefei Changxin Phase II, Beijing Changxin, and Shanghai Dingtai Jiangxin, leading to performance growth. As of the 2023 annual report, the company's fixed assets were 2,288 billion yuan, an increase of 809 million yuan over the end of '22. According to the data disclosed in the 2023 annual report, 1) According to the sales model, the share of on-site gas production revenue increased rapidly: during the reporting period, the company's on-site gas business achieved revenue of 840 million yuan (YoY +49%), gross profit margin of 41.42% (YoY+1.44pct), retail business achieved revenue of 885 million yuan (YoY +4%), gross profit margin of 28.31% (YOY-11.30pct); 2) According to the product, the growth rate of electronic bulk gas was higher: during the reporting period, the company achieved revenue of 840 million yuan (YoY+) 25%), gross profit margin of 39.10% (YoY -5.42pct), general industrial gas achieved revenue of 515 million yuan (YoY +16%), gross profit margin 24.35% (YoY 5.05pct); 3) According to the industry, the share of end customers continued to increase: during the reporting period, the company's terminal client achieved revenue of 1,501 billion yuan (YoY +28%), gross profit margin 36.26% (YoY -6%), gross profit margin 24.26% (YoY -6%) YOY-16.53pct). Looking ahead, the domestic semiconductor and panel sector is expected to usher in a new round of capital expenditure, and the company is expected to fully benefit.

The decline in helium prices since 2023 has dragged down short-term performance to a certain extent, relying on the electronics bulk gas core industry to develop electronic specialty gas products and create a new strategic growth pole. In 2022, Qatar implemented helium plant maintenance to reduce production. Coupled with delays in gas supply to Russia's Amur gas source due to the Russian-Ukrainian conflict, helium prices began to rise and peaked in the second half of the year. However, since 2023, the price of helium has continued to fall, affecting the company's performance to a certain extent. Facing the cycle of changes in helium prices, the company's Guangzhou and Wuhan helium production bases were completed and put into operation. At the same time, it continued to develop more helium resources, develop high-quality domestic and foreign helium terminal customers, and establish an increasingly perfect global supply chain system through investment and construction, strengthened operation, and expanded terminals. The market supply capacity was steadily improving, further consolidating the company's leading position in the helium business.

Relying on customer stickiness in the on-site gas production business and in-depth understanding of customer business, the company further developed, produced and supplied electronic special gas products, and actively promoted the development and construction of products such as C4F6 and HCl during the reporting period. At the same time, the company announced that it plans to invest no more than 534,75 million yuan in the Chifeng nitrogen trifluoride electronic specialty gas R&D and production project (3000t/a), and no more than 393.24 million yuan in the electronic specialty gas R&D and production project in the Hefei Economic Development Zone, gradually expanding its product categories, extending its business areas, and creating a new strategic growth pole.

Investment analysis opinion: Maintain the 2024-2025 net profit forecast of 414 million yuan or 600 million yuan, add the 2026 net profit forecast of 837 million yuan, and the PE corresponding to the current market value is 33, 23, and 17X, maintaining the “increase” rating.

Risk warning: 1) The construction progress of the on-site gas production project and the customer's gas consumption after production commencement fell short of expectations; 2) downstream capital expenditure slowed, and the company's new project orders fell short of expectations; 3) helium prices fluctuated sharply.