2024Q1 net profit achieved a high increase, and industry sentiment continued to rise. In 2024Q1, the company achieved revenue of 5.47 billion yuan, an increase of 19.52% over the previous year, and realized net profit of 288 million yuan after deduction, an increase of 118.26% over the previous year. The company is a domestic fluorine chemical leader, leading the country in the quota of third-generation refrigerants HFCs. Its main business covers R&D, production and sales of basic chemical raw materials, food packaging materials, fluorine chemical raw materials and subsequent products. Facing a complex and changing market environment, the company insists on steady progress to achieve steady operation, further expand high-quality development space, and further enhance its competitive position in the industry. 2024Q1 completed the consolidation of Zibo Feiyuan Chemical Co., Ltd. to form a “1+3” fluorine refrigerant global operation layout with Quzhou Benbu as the core, and solidify the company's leading position in the global fluorine refrigerant industry.
2024Q2, refrigerant prices remained high overall. The average quarterly prices of R22 and R32 in East China were 17,500 yuan and 17,000 yuan, with increases of 33.33% and 28.57% respectively. As the peak season for the maintenance market approaches, refrigerant prices are expected to rise further as the country promotes equipment upgrades and supports and encourages the renewal and consumption of household appliances.
HFCs have entered the quota management year, and the industry landscape is expected to be optimized
According to the Kigali Amendment, China will officially enter the HFCs production and consumption reduction cycle in 2024. Each HFCS enterprise will organize production and operation activities according to production and use quotas approved by the country. Backward production capacity that has not received sufficient quotas or is quickly cleared, and the supply pattern of the industry is expected to be optimized. According to the “Notice on the 2024 Production, Use and Import Quota Issuance of Ozone Depleting Substances and Hydrofluorocarbons” issued by the Ministry of Ecology and Environment on January 11, the company's HFCs production quota after acquiring Zibo Feiyuan Chemical totaled 278,800 tons, accounting for 37.3% of the total industry share. R32, R134a, and R125 production quotas account for 45%, 35.5%, and 38.7%. The share is expected to obtain pricing rights in the HFCs industry in the future.
Continue to improve the layout of the fluorine chemical industry chain and promote multiple projects to help growth
The company maintains a high pace of R&D and project construction to extend and complete the industrial chain. At present, the company's 100kt/a polyvinylidene chloride high-performance barrier material project (Phase II A), ammonia synthesis raw material route and energy saving and emission reduction technology transformation project, 120,000 tons/year organic alcohol expansion project, 7,000t/AFKM, and 30kt/a refrigerant overseas plant have all been completed. The company also plans to build a number of new high-performance fluorochlorine material projects to further improve the company's fluorine chemical industry chain layout.
Profit forecasting
Considering that the company is a domestic integrated fluorine chemical leader, it is expected to fully benefit from the rising refrigerant boom, while the company continues to promote the high-end transformation of fluoropolymers and fluorinated liquids. The company's revenue for 2024-2026 is 240.9, 272, and 30.6 billion yuan, respectively, and EPS is 1, 1.3, and 1.63 yuan, respectively. The current stock price corresponds to PE of 23.3, 17.9, and 14.3 times, respectively. This is the first coverage, giving it a “buy” investment rating.
Risk warning
Downward economic risk; risk of large fluctuations in product prices; risk of project construction falling short of expectations; risk of limited commencement of construction due to environmental protection policies; risk of downstream demand falling short of expectations.