As a leading enterprise in polyvinyl alcohol (PVA), the company has laid out a series of new materials and other products around the PVA industry chain. The company is currently the domestic producer of polyvinyl alcohol (PVA) with the most complete product series, with four production bases in Anhui, Inner Mongolia, Guangxi and Zhejiang. It has more than 40 products in four major series of chemical, chemical fiber, new materials and building materials in the PVA industry chain. The company has increased capital expenditure on new material projects in recent years. As of the third quarter of 2023, the company's investment in new projects with an annual output of 10,000 tons of automotive film-grade PVB resin, an annual output of 20,000 tons of redispersible rubber powder, an annual output of 35,000 tons of differentiated PET polyester chips, an annual output of 5,000 tons of functional PVA resin, an annual output of 7 million square meters of PVA optical film, an annual output of 7 million square meters of polarizer, and an annual output of 60,000 tons of VAE emulsion have all been completed and put into production. The company's product structure has been further optimized, and five major industrial chains with PVA industry as the core and high-end functional film materials as the leader have been initially formed. PVA optical film and PVB new materials are released in volume. The company's 7 million square meters of large-size PVA optical film broke through the foreign technology blockade and was officially mass-produced and supplied in April 23. Its customers are polarizer companies such as Sanlipu and Shenzhen Textile. It can be used for large-size LCD panels, breaking the monopoly of Japan's Kuraray and Synthetic Chemistry. The company will expand production of 30 million square meters of large-size PVA optical film to further expand the advantages of the PVA industry chain. The company is currently a full-industry chain enterprise of PVA-PVB resin-PVB film. The current PVB intermediate film production capacity is 20,000 tons/year. In the future, the company will have a PVB intermediate film production capacity of 40,000 tons/year. The company's photovoltaic-grade PVB film has been successfully certified by downstream photovoltaic module factories, and once BIPV demand starts, it will benefit significantly.
The price of the company's traditional business products fell in the third quarter. In the first three quarters of 2023, the company achieved revenue of 6.7 billion yuan, a year-on-year decrease of 7.98%, and realized a net profit attributable to the parent of 410 million yuan, a year-on-year decrease of 68.6%.
In the third quarter, the company achieved revenue of 2.14 billion yuan, down 3.7% year-on-year and 9.0% quarter-on-quarter, and realized a net profit of 59 million yuan attributable to the parent company, down 81.7% year-on-year and 72.8% quarter-on-quarter. The performance in the first three quarters decreased year-on-year due to a sharp decline in the prices of the company's main products: the average sales price of PVA in the first three quarters was 11,907.15 yuan/ton, down 40.8% year-on-year, and achieved revenue of 1.8 billion yuan, down 38.4% year-on-year.
We predict that the company will achieve operating income of 8.981 billion/10.931 billion/12.032 billion yuan in 2023/2024/2025, a year-on-year decrease of -9.66%/+27.71%/+10.07%, and net profit attributable to the parent company of 488 million/656 million/870 million yuan, a year-on-year decrease of -64.36%/+34.39%/+32.74%, corresponding to EPS of 0.23/0.30/0.40 yuan, and the current market value corresponding to PE is 18.23X/13.57X/10.22X respectively. Considering the growth brought by the company's new materials, we give the company 15X in 2024, a target price of 4.5 yuan/share, and give it an "overweight" rating for the first coverage.
Risk of production capacity deployment not meeting expectations; risk of R&D progress not meeting progress; risk of downstream demand not meeting expectations; risk of price fluctuations of products and raw materials.