HCSC(SH:600378) EBSCN·2024-05-08 00:32Investment Rating - The report maintains a "Buy" rating for the company with a current price of 31.70 CNY [1] Core Views - The company's performance is under pressure due to the decline in prices of fluorinated materials, and attention should be paid to capacity construction and asset acquisition progress [1][4] - The company reported a revenue of 7.852 billion CNY in 2023, a decrease of 13.40% year-on-year, and a net profit of 900 million CNY, down 22.76% year-on-year [3][6] - The company is actively pursuing capacity expansion and has plans to acquire 100% of Sinochem Blue Sky to enhance its fluorochemical industry chain [5][6] Financial Performance - In Q4 2023, the company achieved a revenue of 1.579 billion CNY, a year-on-year decrease of 39.27% and a quarter-on-quarter decrease of 19.86% [3] - For Q1 2024, the company reported a revenue of 1.613 billion CNY, down 21.62% year-on-year but up 2.17% quarter-on-quarter [3] - The average selling prices of PTFE resin, fluororubber, and fluorinated gases decreased by 13.4%, 44.4%, and 5.4% respectively in 2023 [4] Capacity Expansion and Strategic Moves - The company is advancing its capacity construction with existing capacities of 30,000 tons/year for fluororesin and 5,500 tons/year for fluororubber [5] - A new 4,600 tons/year electronic gas project has been completed and is in operation, positioning the company among the leaders in domestic fluorinated electronic gases [5] - The acquisition of Sinochem Blue Sky is valued at approximately 7.244 billion CNY, which will enhance the company's product lines and overall competitiveness in the fluorochemical sector [5][6] Profit Forecast and Valuation - The profit forecast for 2024-2026 has been adjusted downward due to the decline in product prices, with expected net profits of 1.039 billion CNY, 1.174 billion CNY, and 1.299 billion CNY respectively [6][7] - The report indicates a projected revenue growth rate of 10.44% for 2024, following a decline of 13.40% in 2023 [7]