Description of the event
Company disclosure: 1. 2023 annual report: realized revenue of 3.52 billion yuan, a year-on-year decrease of 1.85%; attributable net profit of 492 million yuan, a year-on-year decrease of 15.7%; 2. 2024Q1 report: realized revenue of 700 million yuan, a year-on-year decrease of 7.4%; and attributable net profit of 82 million yuan, a year-on-year decrease of 4.6%.
Incident comments
Sales increased slightly, and production capacity expansion progressed steadily. Ceramic fiber cotton, blanket and component products are mainly used in industrial furnaces, heating device linings, pipelines, facility insulation, fire protection and other fields in the petrochemical, metallurgy, electricity, building materials, non-ferrous metals, machinery manufacturing and other industries. In 2023, the company's sales volume of ceramic fiber cotton, blankets and component products increased by 37,500 tons year-on-year, and the comprehensive capacity utilization rate reached more than 93%. The company continuously improved equipment production efficiency and product production volume through measures such as technological innovation, equipment improvement, process optimization, capacity expansion, and production organization optimization. During the reporting period, the production capacity of ceramic fiber cotton blankets increased by 80,000 tons. Inner Mongolia Luyang Energy-saving Materials Co., Ltd. completed the construction and commissioning of the first phase of the 120,000 ton ceramic fiber blanket project with an annual output capacity of 40,000 tons and the production capacity of the second phase of the first batch of 40,000 tons in March and December 2023, respectively.
In terms of operations, the company's sales volume of ceramic fiber cotton, blankets and components in 2023 was 465,700 tons, up 8.8% year on year, and sales volume of wet ceramic fiber products was 47,400 tons, up 9.7% year on year; overall gross sales margin was 31%, down nearly 2 pcts year on year. It is speculated that the downstream boom mainly limited the superposition of changes in product structure. Looking at a single quarter, the revenue of 23Q4 and 24Q1 companies was 1.14 billion yuan and 700 million yuan respectively, with year-on-year growth rates of 4.9% and -7.3%, respectively; performance was 102 million yuan and 82 million yuan, respectively, with year-on-year growth rates of -14% and -4.6%, respectively.
Asset consolidation is complete, and the new business provides new growth points. In June 2023, the company completed the acquisition of 100% shares in Yixing Gaoqi Environmental Protection. Yixing Gaoqi is mainly engaged in the production and sale of industrial filter bags. In November 2023, the company completed the acquisition of 100% equity interest in Qinai United Fiber (Shanghai). Qinai Shanghai is mainly engaged in cutting, packaging and sales of automotive emission control system packaging liner products and lithium battery ceramic fiber paper products. Relying on the company's business layout with two new platforms in the future, the company is expected to usher in new growth points in the industrial filtration and automotive fields.
The ceramic fiber boom can be expected. As a lining material for ethylene furnaces, ceramic fiber mainly provides better fireproof insulation. Compared with traditional refractory materials, its performance is better, and the permeability rate is also improving. Currently, 2024-2025 or the peak construction period for ethylene cracking furnaces will greatly boost demand for ceramic fiber. At the same time, integrated refining is relaying the demand for more furnace penetration+maintenance and modification, and the strong petrochemical boom is strongly supported. Considering the company's poor operation in 2023, the main reason is that downstream projects are progressing slowly, and it is expected that 2024 will usher in an accelerated release.
The company's 2024-2025 performance is expected to be 630-850 million, corresponding PE is 12 or 9 times, and the purchase rating.
Risk warning
1. The ceramic fiber boom has not improved significantly; 2. Price competition in the low-end market is fierce.