Items:
Keshun shares released the mid-2023 report: during the reporting period, the company achieved operating income of 4.337 billion, year-on-year + 4.73%, net profit of 61 million yuan, year-on-year-75.21%, single Q2 realized operating income of 2.47 billion, year-on-year + 2.7%, return to mother net profit of 3 million yuan,-98.3%.
Comments:
Income continues to grow and channels sink steadily. The company's 2023 H1 realized revenue of 4.337 billion yuan, + 4.73% year-on-year, and net profit of 61 million yuan,-75.21% year-on-year. From a quarterly point of view, the company's 23Q1-Q2 revenue is + 7.6% year-on-year and 2.7% respectively, and the mother net profit is-41% and-98% respectively. From a product point of view, 2023 H1 company waterproof roll material revenue 2.272 billion, year-on-year-4.77%, gross profit margin-1.9pct to 19.9%, waterproof paint 1.076 billion, year-on-year + 20.49%, gross profit margin + 0.4pct to 24.9%, construction 741 million, year-on-year + 3.86%, gross profit margin-8.1pct to 16.3%. In terms of channels, in the first half of the year, the company continued to increase the development and cultivation of dealer customers and improve the national prefecture-level city coverage of distributors. as well as special dealer supplements for specific areas or products such as shock isolation, building repair, Rain Water management, photovoltaic energy, plastering gypsum and so on. In addition, 2.198 billion of the company's convertible bond financing has been successfully issued and listed, and the funds raised are mainly used for the expansion of the production base, the original factory intelligent transformation project and part of the supplementary liquidity.
Gross profit margin, impairment, and other earnings affect earnings. The company's 2023 H1 comprehensive gross profit margin is 21.12%, year-on-year-1.65pct. We believe that the pressure on gross profit margin is mainly due to the slightly lower growth rate of company size under weak demand and more investment in C-end channel construction. 23H1 period rate is 15.01%, year-on-year + 0.98pct, itemized, management rate, R & D rate, sales rate, financial rate + 0.07pct, + 0.22pct, + 0.7pct, + 0.02pct respectively. The net interest rate is 1.39%, year-on-year-4.52pct, the decline is much larger than the gross profit margin, mainly due to higher expenses, reduced other income and increased impairment. During the reporting period, the company's credit impairment plus asset impairment losses totaled 161 million, an increase of 60 million over the same period last year. Net operating cash flow-754 million yuan, 76 million yuan more than the same period last year. The cash-to-cash ratio is 82.51%, year-on-year + 1.8pct. As of the end of 23H1, the company's accounts receivable + notes receivable 5.727 billion, year-on-year + 2%.
Strengthen C-end channel construction, reduce cost and enhance efficiency: 1) strengthen C-end market development: online and offline simultaneously strengthen the construction of Keshun building materials brand; at the same time, C-end continues to enrich product categories such as waterproof paint, ceramic tile glue, sewing agent, reinforcement and other product categories to speed up the construction of national satellite factories; 2) set up a special cost reduction team to enhance profitability: senior executives take the lead, multi-departments participate together, and strengthen cost reduction assessment. 3) strengthen the management of accounts receivable and make full use of convertible bonds to raise funds to create long-term competitiveness.
Profit forecast and investment advice: the company is one of the leaders in the waterproofing industry with significant competitive advantages. with the landing of the new waterproofing regulations, the company's market share is expected to further increase. Taking into account the slow recovery of downstream demand this year and the company's high expenditure on channel construction, we downgrade the company's EPS forecast for 2023-2025 to 0.28 yuan per share (the original value is 0.56 PE 0.74 yuan per share), and the corresponding PE is 0.95 yuan per share, which is adjusted to "recommended" rating.
Risk tips: a sharp decline in the area of new real estate construction, sharp fluctuations in raw material prices, shock isolation and other new business development is not as expected.