Incident: The company released its 2022 annual report and the first quarterly report of 2023. In '22, the company achieved operating income of 3.670 billion yuan, +2.50% year on year; net profit of the mother was 91 million yuan, +29.23% year on year. Q1 of '23 achieved revenue of 741 million yuan, -20.87% year-on-year, +16.20% year-on-year; Guimu's net profit was 102 million yuan, +124.65% year-on-year, +510.92% month-on-month. The performance was in line with expectations.
The company's profitability rebounded year-on-year in 23Q1, and the expansion of the carbon fiber business further enhanced the company's profitability.
The company's profitability has rebounded since 23 years ago. The company's comprehensive gross margin in '22 was 8.47%, -0.41pct year on year; net interest rate was -2.36%, +1.35pct year on year. The gross profit margin and net interest rate for Q1 in '23 were 13.07%/1.63%, respectively, +3.63pct/+6.86pct, and +1.69pct/+2.07pct month-on-month. In the second half of '22, the company changed its viscose staple fiber business, which had continued to lose money, to a contract processing business model. This model continued in '23. In addition, the high-margin carbon fiber business is expected to expand in '23, which will enhance the company's overall performance and profitability.
The construction of carbon fiber production capacity has been completed, and demand for carbon fiber in wind power and other industries is expected to be released. In '22, the company accelerated the construction of carbon fiber-related projects. The total annual sales volume of carbon fiber was 805 tons, achieving carbon fiber revenue of 127 million yuan; achieving a gross profit margin of 2.25%. In addition, the wholly-owned subsidiary Kamek Small Wire Bundle has fully completed production of carbon fiber, achieving revenue of 127 million yuan. An announcement was issued on February 27, '23, that the construction of a 12,000-ton carbonization line has been successfully completed. As production capacity and demand for carbon fiber in wind power and other industries are released year on year, the company's business is expected to bring high profits.
Viscose filament remains the industry leader, and its market share in the high-end market has increased. In '22, the company sold 71,000 tons of viscose filament, achieving revenue of 2,586 million yuan, +17.26% year on year; gross profit margin was 13.53%, +1.52 pct year on year.
The company continued to optimize and upgrade its products during the reporting period. Viscose filaments are rich in differentiated categories, and the market share of high-end products exceeds 45%. Demand for filament is expected to increase as negative effects such as the epidemic subside, helping the company's performance and profitability to rise sharply.
Investment advice: The company's net profit from 23 to 25 is estimated to be 1.58/356/607 million yuan respectively, compared with +272%/+126%/+70%, and the corresponding EPS is 0.06/0.14/0.25 yuan, maintaining the “buy” rating.
Risk warning: industry cyclical risks, industrial transformation risks, rising raw material prices, etc.