Key points of investment

The company released its 2022 annual report and 23Q1 quarterly report. The 22Q4 and 23Q1 companies completed the acquisitions and business changes of Pacific Zhaoqing and Pacific Beijing respectively. The financial data for this report is based on retrospectively adjusted data: 22A achieved revenue of 6.878 billion yuan (+20.78% year-on-year), net profit of 209 million yuan (+22.83% year-on-year), net profit of 181 million yuan (+20.5% year-on-year) after deducting non-net profit (+20.5% year-on-year); the release of production capacity and rising raw material prices in Cambodia in '22 drove a rise in revenue and price adjustments in '22 The mechanism changed to quarterly price adjustments. The price increase was higher than the rise in raw materials, driving a simultaneous increase in profits. Among them, 22Q4 achieved revenue of 1.65 billion yuan (-8.4% YoY) and net profit of 3.92 million yuan (-89.94% YoY). The decline in Guimu's net profit was mainly due to asset impairment of 32.83 million yuan in Q4. In 23Q1, the company achieved revenue of 89.03 million yuan (+1.59% year-on-year), achieved net profit of 53.36 million yuan (+4.67% year-on-year), and achieved net profit of 53.91 million yuan after deducting non-return to the mother (+32.4% year-on-year)

The pandemic affected Q4 performance, and asset impairment suppressed profit release

Q4 The company's revenue was -8.4% year-on-year. The main factors are expected: 1) Prices of the company's core raw materials, aluminum and tinplate have continued to decline since reaching a high point in March 22. It bottomed out in July, and the range has fluctuated since August '22. The company's Q4 followed a sharp decline in raw material prices, and the price of the company's products was legally priced according to cost plus, and the 22Q4 raw material price was also higher than 21Q4; 2) The impact of the epidemic spread in December, production by the company's downstream customers was blocked, and demand for the company's products declined. Q4 The company's net profit was 3.92 million yuan (-89.94% year-on-year), mainly due to the company's accrued accounts receivable, inventory and other assets depreciation of 32.83 million yuan. After restoration, the company achieved net profit of 36.75 million yuan (-21% year-on-year), mainly due to the impact of the epidemic on capacity utilization. The company's scale effect was affected, and the Q4 company's gross profit margin was 8.9% (-0.96pct year-on-year).

Low revenue growth from raw materials in Q1 was under pressure. The profit release trend did not change Q1 company's revenue by +1.59%. Higher capacity release sales increased and revenue growth was mainly pressured by: 1) Core raw materials Q1 still fluctuated within a range. Calculating domestic aluminum prices, the average price of aluminum in 23Q1 was 18,400 yuan/ton, 22Q1 was 22,200 yuan/ton, and 23Q1 fell 16.9% year-on-year. 2) Raw materials declined, and the two cans of core downstream demand-side beer Q1 were off-season, and the company reduced the price of the product to a certain extent. On the profit side, Q1 achieved net profit of 53.36 million yuan (+4.67% over the same period). The slow growth was mainly due to fewer government subsidies in 23Q1, net profit after deducting 32.4% year-on-year increase. Profits maintained a rapid release trend. The rapid release of profits corresponded to the Q1 gross profit margin of 10.69% (+1.35pct), mainly due to: 1) 23Q1 liberalization, demand for overseas trips during the Spring Festival increased, and demand for Lulu from three-piece cans of core customers improved simultaneously, and the company benefited simultaneously, 2) High Maori Cambodia's second-phase production capacity released in 22Q4, was good, Q1. 3) Aluminum bottle business Along with the restoration of the post-epidemic scenario, the demand side improved dramatically, contributing to increased profits.

Looking ahead to Q2 and the whole year, we are optimistic that capacity release & increased capacity utilization will drive performance growth Q2, which will soon enter the peak season for core downstream beer demand. Profit from the two cans is expected to continue to rise along with improved demand. It is expected that the company's two cans will continue to expand production in Cambodia throughout the year, contributing to increased profits. Tencel Red Bull is developing well. It is expected that the company will further follow the steady growth of Tencel Red Bull, benefiting from the recovery in demand from visiting family and friends after the epidemic, which is expected to jointly drive the company's profit release in 23 years.

Profit forecasting and valuation

It is expected to achieve revenue of 81.0/95.6/109.3 in 22-24, an increase of 18%/18%/14% respectively, and achieve net profit of 3.15/408/481 million yuan, an increase of 51%/30%/18% respectively, corresponding to PE15/12/10X and maintaining the “buy” rating.

Risk warning

Raw material prices fluctuate, downstream demand recovery falls short of expectations, and industry competition intensifies