Description of the event
On the evening of April 12, 2024, Dongcai Technology released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 3,737 billion yuan, a year-on-year increase of 2.67%, net profit to mother of 329 million yuan, a year-on-year decrease of 20.78%, and a year-on-year gross profit margin of 19.01%, a year-on-year decrease of 1.66 pcts. In 2024 Q1, revenue was 921 million yuan, up 7.26% year on year, up 0.99% month on month, and net profit to mother was 51 million yuan, down 28.23% year on year and up 120.84% month on month.
The bottom of the main product price was compounded by the impact of the fire. In 2023, the company's performance was under pressure in the short term. In 2023, the company put into operation projects such as 20,000 tons of special functional polyester film, 160,000 tons of high-performance resin and formaldehyde. The company's production and sales increased, but commodity prices entered a downward cycle, and overall prices were under pressure. In 2023, the company's sales volume of electrical insulation materials/new energy materials/optical film materials/electronic materials/electronic materials/environmentally friendly flame retardant materials was 3.14/5.83/3.93/11,000 tons respectively, a year-on-year change of -0.37%/+19.88%/+17.01%/+32.92%/-2.06%. In terms of price, the average price of electrical insulation materials/new energy materials/optical film materials/electronic materials/environmentally friendly flame retardant materials in 2023 was 1.15/2.25/1.09/2.09/111,000 yuan/ton, respectively, with a year-on-year change of -18.72/-16.13/-11.29/ -20.13/ +11.24%. 2024Q1, the price is still in the bottom grinding stage. The average price of 2024Q1 electrical insulation materials/new energy materials/optical film materials/electronic materials/environmentally friendly flame retardant materials was 1.04/1.71/1.16/1.98/0.98 million yuan/ton, year-on-year change -18.10/-22.99/+7.87/-13.11/ -8.75%, and month-on-month change +1.91/-15.09/+12.23/ -19.29/ -19.09%. The company fire had an impact on Dongcai's new materials business in 2023Q4 and 2024Q1, dragging down the company's gross margin and performance to a certain extent.
The fire project gradually resumed production and advanced new production capacity in an orderly manner, further opening up room for the company to actively rectify and repair the fire. Currently, with the exception of the fire accident workshop, all production workshops of Dongcai New Materials have fully resumed production, and business is gradually returning to normal. In addition, production and sales of special resin materials for high-frequency high-speed printed circuit boards with an annual output of 5,200 tons have gradually increased. The project with an annual output of 5,000 tons of metallized film for new energy capacitors, a high-performance resin and formaldehyde project with an annual output of 160,000 tons, and an optical grade polyester base film project with an annual output of 20,000 tons will gradually be put into operation in the future. In addition, it has jointly signed a “Strategic Cooperation Framework Agreement” with Shanjin Optoelectronics and Yangzhou Wanrun to accelerate the company's core competitiveness in the field of PET base film for polarizer films and domestic replacement projects for polarizer film. Of the core business Stable and sustainable development.
Investment advice
As a leading enterprise in the membrane materials industry, with the rapid development of electronic materials and new energy businesses and successive commissioning, the degree of industrial chain integration has increased dramatically. Affected by the declining product cycle and fires, the company's net profit for 2024-2026 is estimated to be 4.32, 5.76, and 729 million yuan, respectively, with year-on-year growth rates of 31.5%, 33.2%, and 26.6% (previous results for 2024 and 2025 were 565 million yuan and 759 million yuan respectively, down 23.54% and 24.11% from previous values, respectively) ), the current stock price corresponding to PE is 18, 14, and 11 times, respectively, maintaining a “buy” rating.
Risk warning
(1) Risks caused by price fluctuations of raw materials and major products; (2) production safety risks;
(3) Environmental protection risks;
(4) The project's commissioning schedule fell short of expectations.