FangDa Carbon(600516) 光大证券·2024-05-05 03:06Investment Rating - The report maintains a "Buy" rating for the company, citing the expected long-term investment value due to the anticipated expansion of the carbon trading market [2]. Core Views - The company's profitability has been achieved despite losses in the main graphite electrode business, with a net profit of 421 million yuan in 2023, primarily from subsidiaries [1][2]. - The expansion of the national carbon trading market is expected to benefit the company significantly, especially with the steel industry being included in the market [1]. - The company has a low debt ratio of 15.53% as of Q1 2024, with cash reserves significantly exceeding interest-bearing debt [1]. Summary by Sections Financial Performance - In Q1 2024, the company reported revenue of 1.388 billion yuan, a year-on-year increase of 3.12% and a quarter-on-quarter increase of 10.60%. The net profit attributable to shareholders was 171 million yuan, down 22.62% year-on-year but up 434.38% quarter-on-quarter [2]. - The company’s revenue and net profit forecasts for 2024 and 2025 have been adjusted downwards due to low profitability in the steel industry, with expected net profits of 489 million yuan and 591 million yuan respectively [2]. Market Outlook - The national carbon market's price increased from 60 yuan/ton in July 2023 to 103 yuan/ton in April 2024, representing a 72% rise, which is favorable for the carbon reduction industry [1]. - The company is positioned to benefit from the shift towards electric arc furnace steelmaking, which has lower carbon emissions compared to traditional methods, potentially increasing demand for its graphite electrodes [1]. Product Development - The company has successfully developed new products outside of graphite electrodes, such as a 600KVA graphite cathode for aluminum electrolysis, contributing to profit growth [1]. - The subsidiary Chengdu Carbon Materials achieved a net profit of 347 million yuan in 2023, focusing on key graphite materials for the new energy and semiconductor industries, marking a 1.44% year-on-year increase [1].