Shengquan Group(SH:605589) Xin Lang Cai Jing·2025-10-30 08:37Core Viewpoint - The company reported a slight decline in Q3 net profit due to falling prices of synthetic resin products, but overall performance in the first three quarters shows growth in revenue and profit, indicating potential for recovery in the future [1][4]. Financial Performance - Q3 revenue reached 2.722 billion yuan, a year-on-year increase of 7.75% but a quarter-on-quarter decrease of 5.89% [1]. - Q3 net profit was 259 million yuan, up 3.73% year-on-year but down 12.10% quarter-on-quarter [1]. - For the first three quarters of 2025, revenue totaled 8.072 billion yuan, a year-on-year increase of 12.87%, with net profit at 760 million yuan, up 30.81% year-on-year [1]. Segment Performance - Advanced electronic materials and battery materials saw significant demand growth, with sales volume reaching 60,000 tons, a 19% year-on-year increase, and sales revenue of 1.2 billion yuan, up 32% [2]. - The synthetic resin sector maintained resilience, achieving sales volume of 590,000 tons, a 14% year-on-year increase, and sales revenue of 4.1 billion yuan, up 5% [2]. - Biomass products recorded sales volume of 170,000 tons, a 30% year-on-year increase, with sales revenue of 700 million yuan, up 25% [2]. Project Development - The company is advancing several key projects, including a 2,000 tons/year PPO/OPE resin project and a 1,000 tons/year carbon hydrogen resin project, expected to be operational by Q3 2026 [3]. - The biomass production base is running steadily, with expansion projects for xylitol expected to be operational by the end of 2025 and the second half of 2026 [3]. - The company plans to issue convertible bonds to invest in green energy battery material projects, which will enhance production capacity significantly [3]. Profit Forecast and Valuation - Due to short-term demand weakness, the net profit forecast for 2025 has been revised down to 1.09 billion yuan, a 9% decrease from the previous estimate [4]. - The company expects net profits for 2025, 2026, and 2027 to be 1.09 billion, 1.39 billion, and 1.61 billion yuan respectively, with corresponding EPS of 1.28, 1.64, and 1.90 yuan [4]. - A target price of 39.36 yuan has been set based on a 24x PE valuation for 2026, maintaining an "overweight" rating [4].