China Salt Chemical(SH:600328) HTSC·2024-07-26 02:02Investment Rating - The investment rating for the company is maintained at "Buy" with a target price of RMB 8.20 [1] Core Views - The company reported a significant decline in revenue and net profit for the first half of 2024, with revenue at RMB 6.36 billion, down 26.5% year-on-year, and net profit at RMB 441 million, down 42.2% year-on-year. However, the second quarter showed a strong recovery with net profit of RMB 384 million, up 50.3% year-on-year and a staggering 583% quarter-on-quarter increase [1][2] - The company expects net profits to recover to RMB 1.2 billion, RMB 1.5 billion, and RMB 1.7 billion for the years 2024, 2025, and 2026 respectively, with corresponding EPS of RMB 0.82, RMB 1.00, and RMB 1.14 [1][5] Summary by Sections Financial Performance - In the first half of 2024, the company sold 1.55 million tons of soda ash, a decrease of 30% year-on-year, with revenue from this segment at RMB 2.8 billion, down 43% year-on-year. The average price was RMB 1,830 per ton, down 18% year-on-year [2] - The company’s gross profit margin decreased by 4.7 percentage points year-on-year to 21.4%, with the second quarter showing an improvement to 26.6% [2] Market Conditions - The prices of light and heavy soda ash have decreased by 3% and 5% respectively since the end of June, indicating a challenging market environment due to weak downstream demand [3] - The company has been optimizing its salt chemical business since acquiring a subsidiary in 2021, focusing on environmental protection and energy efficiency projects [3] Future Outlook - The company has ongoing projects worth RMB 730 million aimed at enhancing its competitive edge through ecological and technological improvements [3] - The forecast for operating income shows a decline from RMB 18.16 billion in 2022 to RMB 14.00 billion in 2024, with a gradual recovery expected thereafter [5]