HUALU-HENGSHENG(SH:600426) EBSCN·2024-04-04 16:00Investment Rating - The report maintains a "Buy" rating for the company [2] Core Views - The company's performance in 2023 was under pressure due to a downturn in the main product market, with total revenue of 27.26 billion yuan, a year-on-year decrease of 9.87%, and a net profit of 3.57 billion yuan, down 43% [5][6] - The production launch of the Jingzhou base is expected to solidify the company's long-term competitiveness, with new projects enhancing production capacity and product offerings [7][8] - The report anticipates a gradual recovery in industry demand, which, combined with the increased production capacity from the Jingzhou base, could lead to improved profitability in the future [8][9] Summary by Sections Revenue Performance - The company reported a total revenue of 79 billion yuan in Q4 2023, showing a year-on-year increase of 9.36% and a quarter-on-quarter increase of 13% [5] - The overall revenue for 2023 was 273 billion yuan, reflecting a significant decline compared to the previous year [5][6] Product and Project Developments - The Jingzhou base's gas power platform and syngas comprehensive utilization projects were launched, with an annual production capacity of 1 million tons of urea, 1 million tons of acetic acid, 150,000 tons of DMF, and 150,000 tons of mixed amine [7] - The high-end solvent project was officially launched in December 2023, with an annual production capacity of 600,000 tons of dimethyl carbonate and 300,000 tons of ethyl methyl carbonate [7] Market Conditions - The chemical industry faced significant challenges in 2023, including demand contraction and supply shocks, leading to a decrease in product prices and profit margins [6][8] - The report notes that while some product price spreads improved, they remained at low levels, impacting the company's profitability [7][8] Profit Forecasts and Valuation - The report has adjusted profit forecasts for 2024 and 2025 downwards by 26%, predicting net profits of 4.66 billion yuan and 5.65 billion yuan respectively, with an EPS of 2.19 yuan and 2.66 yuan [10] - The company is expected to benefit from increased production capacity and improved utilization rates, which could significantly enhance profitability in the coming years [10]