Description of the event
On the evening of August 19, Xinzhoubang released its 2024 semi-annual report. 1H24 achieved total operating income of 3.582 billion yuan, +4.35% year on year; realized net profit of 0.416 billion yuan, or -19.54% year on year; realized net profit deducted from non-mother of 0.431 billion yuan, or -10.02% year on year. 2Q24 achieved total operating income of 2.067 billion yuan, +15.75% year over year; realized net profit of 0.251 billion yuan, -7.54% year over year; realized net profit deducted from non-mother 0.247 billion yuan, -1.38% year over year.
Performance declined under pressure due to electrolytes. Continued promotion of overseas sales is expected to increase the company's profitability. 1H24 achieved total operating income of 3.582 billion yuan, +4.35% over the same period last year; net profit to mother of 0.416 billion yuan, or -19.54% year on year. The main reason for the decline in the company's performance was that the growth rate of the new energy industry slowed in the first half of 2024, competition in the electrolyte industry was fierce, and product prices continued to decline. At the same time, the company's commissioning projects were in a period of climbing capacity, and operating costs increased, which had an adverse impact on the company's profitability. According to Baichuan Yingfu data, the average domestic electrolyte price for 2024H1 was 0.021 million yuan/ton, or -48.2% year-on-year; gross profit was 1082.2 yuan/ton, or -55.8% year-on-year.
In view of the fierce competition in the domestic electrolyte market, the company actively promotes overseas base construction and customer development. In terms of overseas base construction: The Polish base has achieved a localized supply of electrolytes in Europe, and the US base is under construction, and has received a series of incentive programs such as industrial tax relief, infrastructure construction subsidies, and high-quality employment programs from the local government. Overseas customer development: Electrolyte supply agreements have been signed with well-known overseas customers one after another, and the company's electrolyte products will continue to be supplied in 2024 and beyond. With the construction of overseas bases and the development of overseas customers, the company's overall electrolyte profit situation is expected to continue to improve.
The fluorine chemical industry chain continues to improve, and there is broad room for long-term growth
1H24's organic fluorine chemicals business achieved operating income of 0.71 billion yuan, -4.72% year over year; gross profit margin of 62.22%, -10.17pct year on year. 1H24's semiconductor chemicals business achieved revenue of 0.18 billion yuan, +15.98% year-on-year, and a gross profit margin of 44.86%. The main reason is that sales of some fluorinated chemicals and materials, such as fluorinated coolants used in the semiconductor industry, are summarized in the company's semiconductor chemicals business statistics.
On the basis of the continuous release of fluorinated liquid, the company continues to improve the layout of the fluorine chemical industry chain, steadily advancing the construction of two major Hysford and Heidford base projects around the tetrafluoroethylene and hexafluoropropylene industry chains. The high-end fluorine fine chemicals project (phase II) of the expansion project was successfully put into operation. The country's first 1,000-ton next-generation environmentally friendly power insulation gas - perfluoroisobutyronitrile industrial production line is successfully tested and produced smoothly in Sanming Hisford to ensure that the product maintains a leading position in market cost and technology leadership, laying a solid foundation for the company's steady and continuous business growth. At present, the company's first-generation product market share is stable, second-generation product market demand is strong, sales are growing rapidly, and marketing promotion of third-generation products is beginning to bear fruit. Looking forward to the future, as production capacity under construction is gradually completed and put into operation, it can effectively solve existing production capacity bottlenecks and improve the company's organic fluorine chemical industry chain layout. The company is expected to gain a higher market share in the future and open up room for long-term growth.
Investment advice
As a leading enterprise in the domestic electrolyte industry, the company has significant advantages in scale. At the same time, the company's organic fluorine chemicals and semiconductor chemicals are gradually entering a period of rapid release, and the future performance growth rate is impressive. The company is expected to achieve net profit of 1.235, 1.601, and 2.004 billion yuan from 2024 to 2026, respectively, and corresponding PE is 19X, 15X, and 12X times, respectively. Maintain the company's “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.