ZJJH(SH:600160) Huachuang Securities·2024-06-28 04:01Investment Rating - The report assigns a "Strong Buy" rating to the company with a target price of 30.29 CNY per share, compared to the current price of 23.41 CNY [2]. Core Insights - The company is positioned as a leader in the fluorochemical industry, benefiting significantly from the rising prices of refrigerants, particularly the third-generation refrigerants, due to domestic production quotas and global demand [2][9]. - The report highlights the expected strong price elasticity for second-generation refrigerants as their production quotas are set to decrease rapidly, which will likely lead to price increases [2][9]. - The company has a comprehensive fluorochemical industry chain, which enhances its ability to withstand industry cycles and capitalize on price increases [2][22]. Summary by Sections Company Overview - The company was formed through the restructuring of several subsidiaries of the Juhua Group and has grown into a leading fluorochemical enterprise over the past 20 years [16][18]. - The company is controlled by the Zhejiang State-owned Assets Supervision and Administration Commission, holding a 48.09% stake [16]. Refrigerants - The domestic market for refrigerants is expected to see a price increase as the third-generation refrigerants enter a quota system starting in 2024, with the company holding a significant market share of 33% [2][9]. - The second-generation refrigerant R22 has seen its price double by the end of 2023, and further price increases are anticipated as production quotas are reduced [2][9]. - The report emphasizes that the third-generation refrigerants will remain the mainstream choice due to the immaturity and high costs associated with fourth-generation refrigerants [2][38]. Financial Projections - The company is projected to achieve a net profit of 25.68 billion CNY in 2024, 40.89 billion CNY in 2025, and 53.02 billion CNY in 2026, representing year-on-year growth rates of 172.2%, 59.2%, and 29.7% respectively [10]. - Revenue is expected to grow from 25.72 billion CNY in 2024 to 34.15 billion CNY in 2026, with corresponding growth rates of 24.5%, 16.2%, and 14.3% [10]. Industry Position - The company has a complete fluorochemical industry chain, which includes upstream and downstream products, allowing it to maintain a cost advantage and achieve high growth even during periods of low refrigerant prices [2][22]. - The company invests heavily in research and development, with R&D expenses reaching 1 billion CNY in 2023, positioning it as a leader in the development of new fluorinated materials [20][25].