Incidents:
The company released its 2022 report and the first quarter report of 2023. The company achieved revenue of 2,128 million yuan in 2022, a decrease of 17.72% over the previous year; the net profit of the mother was 155 million yuan, a year-on-year decrease of 321.09%.
In Q1 of 2023, the company achieved revenue of 507 million yuan, an increase of 55.72% over the previous year; realized net profit of 343.6671 million yuan, an increase of 300.26% over the previous year; and realized deduction of 2,559 million yuan of non-net profit, an increase of 34.04% over the previous year.
Comment:
Cost pressure compounded by higher expenses, which dragged down profit performance in '22. The company's gross profit margin in 2022 was 19.49%, down 10.85 pct from the previous year. Among them, the gross margin of waterproof membrane products was 20.37%, a decrease of 14.10 pct over the previous year, and the gross margin of waterproof coating products was 19.43%, an increase of 2.01 pct over the previous year. We determined that the gross margin of waterproof membranes declined due to a significant increase in the price of asphalt, the main raw material, which led to a decline in the gross margin of the membrane. The cost side company's sales/management/finance expense ratio was 7.90%/6.4%/1.08%, an increase of 0.29pct/1.86pct/0.38pct over the previous year. The increase in management expenses was mainly due to the cancellation of the company's equity incentives, increased share payments, etc., which increased 2,312,900 yuan over the previous year.
2023Q1 improved significantly compared to the same period, and the quality of operations was gradually optimized. The company achieved a gross profit margin of 22.68% in Q1 2023, an increase of 2.14 pct over the previous year and an increase of 7.42 pct over the previous month; the net sales profit margin was 6.86%, an increase of 4.45 pct over the previous year. With the gradual restoration of the company's operations and the development of related marketing activities, there may be a certain amount of expenses ahead of sales expenses in Q1 2023, and the cost rate situation is expected to improve further with subsequent revenue growth. In terms of operating quality, the company's operating cash flow in the first quarter was 16.2993 million yuan. Compared with -211 million yuan in the same period last year, the company changed from negative to positive. The company actively carried out receivables management and increased quality to promote the company's development.
Research and development continues, and the application of photovoltaic polymer waterproof materials continues to advance. The company invested 131 million yuan in R&D in 2022, and the R&D expenditure rate was 6.14%, an increase of 0.77 pct over the previous year. The developed “full life cycle photovoltaic roof system” (“CSPV” system for short) and the integrated tile system have advantages in industrial and commercial photovoltaic roof usage scenarios. Furthermore, the first phase of the company's polymer industrial park project in Suzhou has now entered the formal production stage, and the compatibility rate of the company's polymer products is expected to increase further.
The company was given an “increase in holdings” rating, and profit forecasts were adjusted according to demand conditions. The company's 2023-2025 EPS is expected to be 0.57/0.86/1.21 yuan, and the corresponding PE is 23.75/15.89/11.25 times.
Risk warning: The recovery in downstream demand fell short of expectations, and valuation and profit forecasts fell short of expectations.