Description of the event
The company released its 2022 annual report, achieving annual operating income of 3.05 billion yuan (+181.8% year on year), net attributable profit of 590 million yuan (+192.5% year on year), and achieved vested non-net profit of 550 million yuan (+180.2% year on year), of which Q4 achieved revenue of 1.0 billion yuan in a single quarter (+147.7% year on year, -1.6% month on month), achieving net attributable profit of 220 million yuan (+243.2% year on year over year), achieving attributable net profit of 230 million yuan (+243.2% year on year), and achieved attributable non-net profit of 2.3 billion yuan (+25.6.3% year-on-year) (+6.3% month-on-month) It is proposed to distribute a cash dividend of 23 yuan (tax included) for every 10 shares to all shareholders.
Incident comments
The company is deeply involved in the international market, and production capacity continues to rise. In 2022, the company's revenue increased 181.8% year on year, and the production and sales volume of lubricant additives reached 151,000 tons (+104,1% over the same period) and 143,000 tons (+112.4% year-on-year) respectively. Mainly due to the transformation of annual agents to compounds, the company made thorough preparations in the early stages, which enabled the company to seize opportunities in the midst of the impact of the international environment on supply chain reconstruction. Throughout the year, overseas revenue accounted for 76.2% of total revenue. The company's annual gross margin was 30.1% (-0.3 pct compared to the previous year), mainly due to increased costs in the first half of the year due to price increases of raw materials such as base oil, o-olefins, polyisobutene, etc. The company's annual fee rate was 8.9% (+0.1pct compared to the previous year). Among them, the sales, management, finance and R&D expenses rates changed by +0.4, 1.6+1.3 and 0.03 pct, respectively. Among them, the increase in financial expense ratio was mainly due to the increase in exchange rate income due to exchange rate changes.
Production capacity is growing rapidly, and there is a continuous transition to compound agents. In terms of production capacity, by the end of 2022, the company already had a design capacity of 170,000 tons of lubricant additives per year, an increase of 69,000 tons/year over 2022. In addition, the progress of the company's annual production of 150,000 tons of lubricant additive series products reached 24.2%. The first phase of the project, with a production capacity of 60,000 tons, was put into production and use in the third quarter of 2022, which has partially met the company's production capacity requirements. As the company's production capacity continues to advance and the transition to compound agents continues, revenue and performance are expected to grow significantly.
Continue to promote API certification and increase research and development of special single agents and innovative single agents. In 2022, the APISP5W-30 gasoline engine oil modulated with the RF6188 gasoline engine oil compound product developed by the company passed all engine bench tests. SP is the highest quality grade in the current gasoline engine oil specifications of the American Petroleum Institute. It can historically adapt to China's national six (b) emission standards. Continued bench tests that can successfully adapt to China's six (b) emission standards have been continuously passed, demonstrating that the company's technical team's rich expertise and strong R&D capabilities have proven that the performance and quality levels of the company's products are high, which helps to further enhance the company's core competitiveness. The company allocates high-quality resources, actively connects with customers, accelerates international authoritative certification of compound products and internal evaluation and testing work for customers, and has made breakthroughs in approving core customers. Compound agent sales have grown rapidly, accounting for 66.4% of compound revenue. The company has been effective in transformation and upgrading, and has set up subsidiaries to improve the upstream and downstream industry chains. The company established Xinxiang Ruifeng Hongtai Chemical Co., Ltd. in April 2022, which is mainly oriented towards the company's upstream integration. The company mainly produces alkyl phenols, alkyl lifting and heavy alkyl benzenesulfonic acid, etc. as raw materials for cleaning agents. After the company is put into operation, it can not only supply the company with core raw materials for the company's department, ensure supply safety and quality stability on these raw materials, further enhance the company's core competitiveness, and maintain the “buyer” rating. The company is a leading supplier of lubricant additives in China and the world's leading supplier of carbonless paper colorants. It has a complete range of single agents and R&D and production capacity for key raw materials. In 2013, it began to enter downstream into the compound agent business with higher added value. Product technology is leading the country, and compound agents continue to pass bench tests by authoritative foreign third parties. As the company's production capacity is not newly released, the company is expected to usher in rapid development. The company's net profit from 2023-2025 is estimated to be 920 million yuan, 1.41 billion yuan and 1.83 billion yuan respectively.
Risk warning
1. The price of upstream raw materials is rising;
2. Downstream demand is lower than expected: the commissioning of new projects falls short of expectations