HUALU-HENGSHENG(SH:600426)2024-05-23 09:02Investment Rating - The report maintains a "Buy" rating for the company [5][7]. Core Views - The company's Q1 2024 performance slightly exceeded expectations, with revenue of 7.978 billion yuan, a year-on-year increase of 31.8%, and a net profit of 1.065 billion yuan, up 36.3% year-on-year [5][6]. - The company is expanding its scale advantages and reinforcing its low-cost barriers, with significant contributions expected from the Jingzhou project and ongoing improvements in the Dezhou facility [6][7]. Summary by Relevant Sections Financial Performance - Q1 2024 revenue reached 7.978 billion yuan, with a year-on-year growth of 31.8% and a quarter-on-quarter increase of 0.81% [5]. - The net profit for the same period was 1.065 billion yuan, reflecting a year-on-year increase of 36.3% and a quarter-on-quarter increase of 64.1% [5][6]. - The company’s sales volume for fertilizers and acetic acid increased significantly, with respective quarter-on-quarter growth rates of 7.7% and 39.6% [6]. Production and Cost Structure - The Jingzhou base has been fully operational since November 2023, contributing to increased production and sales [6]. - Coal prices have decreased, alleviating some cost pressures, with average prices dropping by 20.7% year-on-year [6][7]. - The company has optimized its product structure, leading to a reduction in manufacturing costs and an increase in gross and net profit margins [6][7]. Future Outlook - The company plans to launch several high-end chemical projects at the Jingzhou base, which are expected to start contributing profits by the end of 2024 [7]. - The Dezhou facility is also set to enhance its production capabilities with new projects scheduled for completion in mid-2024 [7]. - The report forecasts net profits of 4.562 billion yuan, 5.508 billion yuan, and 6.796 billion yuan for 2024, 2025, and 2026, respectively, with corresponding PE ratios of 14X, 11X, and 9X [7][8].