Xingfa Chem(SH:600141) Huachuang Securities·2024-04-01 16:00Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 27.86 CNY, compared to the current price of 19.02 CNY [3][4]. Core Views - The company's 2023 annual report shows a revenue of 28.11 billion CNY, a year-on-year decrease of 7.3%, and a net profit attributable to shareholders of 1.38 billion CNY, down 76.4% year-on-year. However, the adjusted net profit excluding non-recurring items increased by 78.3% year-on-year to 1.31 billion CNY [3]. - The company has seen a continuous improvement in profitability since Q3 2023, with Q4 2023 revenue reaching 6.18 billion CNY, a year-on-year increase of 13.3% [3]. - The company has made significant investments in R&D, totaling 1.12 billion CNY in 2023, maintaining a high R&D expense ratio of approximately 4% [3]. Summary by Sections Financial Performance - In 2023, the company recorded total revenue of 28.11 billion CNY, with a net profit of 1.38 billion CNY, reflecting a significant decline in profitability due to low product prices [3][5]. - The Q4 2023 results showed a revenue of 6.18 billion CNY, with a net profit of 445 million CNY, indicating a recovery trend with a quarter-on-quarter increase of 36.9% [3]. Product Segments - The revenue from various segments in 2023 included glyphosate at 4.283 billion CNY, fertilizers at 3.606 billion CNY, specialty chemicals at 5.028 billion CNY, and organic silicon at 2.144 billion CNY, with respective year-on-year changes of +50.6%, +4.6%, -19.3%, and -48.1% [3]. - The company achieved a gross margin of 16.17%, a decrease of 19.44 percentage points year-on-year, primarily due to declining product prices [3]. R&D and Innovation - The company has focused on technological innovation, with multiple key projects in new materials being launched, including electronic-grade phosphoric acid and photovoltaic adhesives, contributing to new profit growth points [3]. - The company’s R&D investment reached 1.12 billion CNY in 2023, indicating a commitment to enhancing its capabilities in microelectronics and new energy materials [3]. Market Outlook - The report predicts a gradual recovery in the company's performance, with net profit forecasts for 2024 and 2025 adjusted to 2.198 billion CNY and 2.622 billion CNY, respectively, reflecting a positive outlook based on historical valuation trends [4][5].