Key elements of the report
Event: on August 30, 2023, Keshun Co., Ltd. released its semi-annual report of 2023. In the first half of 2023, the company achieved operating income of 4.337 billion yuan, an increase of 4.73% over the same period last year, and a net profit of 60.6041 million yuan, down 75.21% from the same period last year. Among them, in the second quarter of 2023, the company achieved operating income of 2.47 billion yuan, up 2.67% from the same period last year, and realized net profit of 2.5286 million yuan, down 98.26% from the same period last year.
Main points of investment:
The overall revenue scale has rebounded, but affected by the relatively high price of raw materials, profitability is under pressure: (1) 23H1 operating income increased by 4.73% compared with the same period last year. From the point of view of product structure, the revenue of waterproof coating increased greatly, and the company's waterproof roll material / waterproof coating / waterproof engineering construction business achieved business income of 22.72 million yuan, respectively. Year-on-year change-4.78% Universe 20.49% Universe 3.86%. The decline in revenue from waterproof roll materials is mainly due to the weak demand in the downstream market caused by the decline in real estate, while the revenue from waterproof coatings has increased significantly, which may be related to the company's increased investment in the C-end market. (2) in terms of gross profit margin, the comprehensive gross profit margin of H1 company in 2023 was 21.12%, which was lower than the same period last year (1.65pct). This was mainly due to the increase in operating costs caused by the relatively high price of raw materials and the decline in product prices as a result of intensified competition in the industry. Among them, the gross profit margin of waterproof roll material / waterproof paint / waterproof project construction is 19.91%, 24.92%, 16.31% respectively, year-on-year change-1.90/+0.42/-8.12pct, the gross profit margin of roll material and engineering construction is greatly affected; (3) the company increases the layout of non-housing business, and Fengze shares achieved operating income of 220 million yuan and net profit of 13.8275 million yuan during the reporting period.
The credit impairment affects the increase of expense rate during the superposition period, and the profit end of the company is under pressure. In 2023, H1, the company's return net profit fell by 75.21% compared with the same period last year. In addition to being affected by gross profit margin, the decline in net profit is mainly affected by credit impairment and increased period charges. In terms of credit impairment, due to the aging of some receivables, the amount of credit impairment loss increased significantly. In 2023, H1, the company's credit impairment was 155 million yuan (100 million yuan in the same period last year), of which Q2 credit impairment was 123 million yuan, an increase of 126.35% over the same period last year. As of the end of 23H1, the balance of the company's accounts receivable was 6.64 billion yuan, an increase of 19.6% over the end of last year. At the same time, the disposal time of the arrival house or the longer age will also increase the amount of impairment provision. In terms of the period expense rate, the sales, management, R & D and financial expense rates of H1 company changed respectively in 2023 compared with the same period last year, 0.67/0.07/0.22/0.02pct, and the expense rate increased during the period. Among them, the increase in the rate of sales expenses is related to the company's expansion of sales channels and increased support for core dealers.
The ratio of income to cash increased slightly: in 2023, the net cash flow generated by the company's operating activities was-754 million yuan, down 11.16% from the same period last year. In 2023, H1, the company's cash-to-cash ratio was 82.50%, an increase of 1.79pct over the same period last year; and a cash-to-cash ratio of 102.95%, an increase of 3.98pct over the same period last year.
Convertible bond financing is listed smoothly, and the company's profitability is expected to be strengthened. During the reporting period, the 2.198 billion plan for the company to issue convertible bonds was approved by the CSRC and successfully issued and listed on the stock market. According to the company's prospectus, the funds raised are mainly used for the expansion of the production base, the intelligent transformation project of the original factory and part of the supplementary liquidity. With the smooth placement of fund-raising funds, on the one hand, it can alleviate the financial pressure of the company to a certain extent, and provide financial guarantee for the company to increase capital and expand production; on the other hand, it can effectively improve the company's production efficiency and consolidate the company's position in the industry.
Profit forecast and investment advice: in the first half of 2023, the company's performance is under short-term pressure due to demand-side, cost-side and other factors. Due to the influence of comprehensive factors such as the company's higher-than-expected increase in credit impairment and the lower than expected start-up of the real estate industry, we downgrade the company's profit forecast. After the adjustment, the operating income from 2023 to 2025 is expected to be 8.84 billion yuan, 10.71 billion yuan and 12.86 billion yuan respectively, the year-on-year growth rate is 15%, 21% and 20% respectively, and the net profit is 350 million yuan, 620 million yuan and 820 million yuan respectively. The current (September 1) corresponding PE is 27, 15 and 11 times, respectively. Maintain the "overweight" rating.
Risk factors: higher-than-expected raw material prices, lower-than-expected demand repair, customer payback risk, credit impairment and so on.