HUALU-HENGSHENG(SH:600426) CMS·2025-10-30 10:38Investment Rating - The report maintains a "Strong Buy" investment rating for the company [3]. Core Views - The company experienced a slight decline in third-quarter performance, with revenue of 23.55 billion yuan, down 6.46% year-on-year, and a net profit of 2.37 billion yuan, down 22.14% year-on-year [1][7]. - Despite the decrease in product prices, the company managed to mitigate performance pressure through increased sales volume, particularly in new energy materials and chemical fertilizers [7]. - The company is actively advancing project launches and has several new projects in the pipeline, which are expected to enhance future growth potential [7]. Financial Data and Valuation - The company reported total revenue of 27.26 billion yuan for 2023, with a projected decline of 10% year-on-year, followed by a recovery of 26% in 2024 [2][14]. - The projected net profit for 2025 is 3.24 billion yuan, reflecting a 17% decrease from the previous year, with earnings per share (EPS) expected to be 1.53 yuan [2][14]. - The current price-to-earnings (PE) ratio is 15.0 for 2023, expected to decrease to 12.2 by 2027, indicating a potential undervaluation [2][14]. Sales and Production Insights - The average selling prices of core products have decreased year-on-year, with significant drops in new energy materials and chemical fertilizers, but sales volumes have increased, helping to offset revenue declines [7]. - The company’s gross margin improved to 19.1% in the third quarter, up 1.6 percentage points year-on-year, despite a slight decline from the previous quarter [7]. Project Development - The company is efficiently advancing project launches, with several new projects already in the preparatory stages, including a 20,000-ton BDO project and a 30.39 billion yuan investment in a gasification platform upgrade [7].