Q4 Revenue improved month-on-month, looking forward to profitability recovery

The company released its 22-year report. Revenue in '22 fell 0.7% to 2,053 million yuan, and net profit of the mother fell 72.9% to 45 million yuan, in line with previous performance forecast expectations ($0.34-051 million), and net profit after deduction fell 85.6% to $21 million. The decline in profit was mainly due to declining real estate sentiment dragging down downstream demand and rising prices of timber and chemical raw materials. On a quarterly basis, 22Q1-Q4's single-quarter revenue was -3.7%/-20.8%/+5.8%/+12.5% to 3.76/4.05/6.08/663 million yuan, and the net profit of the mother returned to the mother was +79.0%/-82.3%/-79.1%/-103.4% to 0.32/0.09/0.06/-0.02 billion yuan. We expect the company's EPS for 23-25 to be 0.12/0.15/0.18, and BPS to be 2.57/2.72/2.90 yuan. Since 2011, the company's PB (LF) history center has been 1.88x. Considering that the growth rate of real estate sales area has slowed since 18, referring to the company's average PB (LF) of 1.38 times the company's PB (LF) average since 18, it was given 1.38 times the target PB in 23, corresponding to the target price of 3.55 yuan, maintaining the “increase in holdings” rating.

Demand for wood-based panels was under pressure in '22. Under demand recovery+production capacity production, revenue recovery in '23 can be expected in terms of business: 1) On the wood-based panel side, affected by the downturn in the real estate boom and repeated disturbances in the external environment in '22, downstream household demand was under pressure, and some factories were phased out, but the company actively explored customer channels to promote differentiated sales of products. The annual revenue of wood-based panels fell slightly 0.26% to 1,957 billion yuan. Looking ahead to 23, it is expected that man-made panel owners will benefit from the recovery in home demand, while the Qinzhou factory will gradually be released. Board revenue grew. 2) In terms of afforestation, forest revenue in '22 fell 5.68% year-on-year to 72 million yuan, but benefiting from rising tree prices, gross margin increased 5.10 pct to 63.80%, and net business profit increased 16.98% to 43.3826 million yuan, a record high.

Gross margin is under short-term pressure under pressure from raw material costs. Net sales interest rate fell 5.9 pct in '22, and the company's gross sales margin fell 5.8 pct to 8.0% in '22. We judge that it was mainly due to factors such as rising costs of wood and chemical raw materials, and pressure on wood-based board prices under demand pressure. With the release of pressure on raw material costs and the shift to normal factory production and operation, gross margin is expected to gradually recover. The expense rate increased by 2.0pct to 7.4% during the 22-year period. Among them, the sales expense ratio decreased by 0.1pct to 0.5%, and the management+R&D expense ratio decreased by 0.5pct to 5.7%, mainly due to the company's implementation of cost reduction and efficiency reduction to enhance operation and management efficiency; the financial expense ratio also increased by 2.5 pct to 1.1%, mainly due to exchange losses of US dollar loans held by the company under the appreciation of the US dollar. Under the combined influence, the company's net sales interest rate fell 5.9 pct to 2.2%.

A leader in the wood-based panel industry, maintaining a “increase in holdings” rating

Considering the impact of raw material costs, we lowered the gross margin forecast for the wood-based panel business. The estimated net profit for 23-25 years was 1.39/17/207 million yuan (194/224 million before 23-24 years), corresponding to EPS was 0.12/0.15/0.18 yuan, and BPS was 2.57/2.72/2.90 yuan. Referring to the company's average PB (LF) value of 1.38 times since 2018, the company was given 1.38 times the target PB in 2023, with a corresponding target price of 3.55 yuan (previous value of 3.68 yuan), maintaining the “increase in holdings” rating.

Risk warning: downstream demand falls short of expectations, raw material costs are rising, and customer expansion falls short of expectations.