Shengquan Group(SH:605589)2024-04-24 11:30Investment Rating - The report assigns an "Outperform" rating to Jinan Shengquan Group with a target price of RMB 29.64 [1][10]. Core Insights - In 2023, the company reported a revenue of RMB 9.12 billion, a decrease of 4.98% year-on-year, while the net profit attributable to shareholders increased by 12.23% to RMB 0.79 billion [9][15]. - The decline in revenue was attributed to lower sales prices across various product lines, including phenolic resin, casting resin, and electronic chemicals [9][15]. - The company's gross profit margin (GPM) and net profit margin (NPM) were 23.02% and 8.80%, reflecting changes of 1.96 and 1.39 percentage points year-on-year [9][15]. Financial Performance - The earnings per share (EPS) for 2024-2026 are projected to be RMB 1.14, 1.47, and 1.68 respectively [3][10]. - The company anticipates a revenue increase to RMB 10.49 billion in 2024, with a year-on-year growth rate of 15.1% [17]. - The gross profit margin is expected to be 22.6% in 2024, improving to 24.5% by 2026 [21]. Product Development and Capacity Expansion - The company is diversifying into new materials and continuously developing new products, including a 1,000-ton functionalized polyphenylene ether project set to launch in Q2 2024 [2]. - The Zhuhai Phase II project will significantly enhance the production capacity of specialty epoxy resins, contributing to growth in various high-end applications [2]. - The Daqing production base has successfully launched a 1 million tons/year biomass refining integrated project, marking a significant upgrade in production capabilities [2]. Cost Management and Efficiency - The company emphasizes green production, achieving cost reduction and efficiency enhancement through self-developed wastewater treatment technology [16][23]. - The use of alternative materials in resin production has improved product quality while reducing environmental impact [16][23]. Dividend Policy - Cash dividends for 2023 amounted to RMB 0.34 billion, representing 42.90% of the net profit attributable to shareholders [9][15].