The company's 2023H1 business situation: In the first half of 2023, the company achieved operating income of 12.713 billion yuan, an increase of 12.39% over the previous year, and achieved net profit of 1,226 billion yuan, a year-on-year decrease of 3.95%.
The core business is growing strongly, and there is still room for growth in the future. By product, thanks to the omnichannel sales strategy and continuous improvement of brand image, the company's three core business segments (tissues, sanitary napkins and diapers) maintained strong revenue growth in the first half of the year, with a year-on-year increase of about 15.1%. Among them, sales revenue from the tissue business was 7.170 billion yuan, up 22.7% year on year, accounting for about 58.7% of overall revenue. Subsequent companies will continue to upgrade products and increase the penetration rate of high-end products; although the sanitary napkin business faces fierce market competition, sales volume will continue to increase. The sales revenue of the 2023H1 sanitary napkin business was 3.22 billion yuan, up 2.9% year on year, accounting for 26.4% of the company's revenue; the diaper business stopped falling and rebounding during the period. Sales revenue was 665 million yuan, up 5.0%, accounting for about 5.5% of the group's overall revenue %. The company believes that the adult diaper market has considerable potential for development, and expects that as the proportion of high-end baby and adult diapers products continues to increase, sales of 2023H2's diaper business are expected to continue to grow.
Grasp emerging consumer trends and actively expand new retail channels. Looking at each channel, with the accelerated development of new consumption models and new business formats integrating online and offline, the scale of the online shopping market continues to expand, and consumers' consumption potential continues to be unleashed. In order to meet the increasingly upgraded needs of consumers, the company continues to innovate and develop and optimize e-commerce and other new retail channels (including O2O and community group purchases), closely follow market trends to seize business opportunities, and promote higher quality products for different brands. The price stability strategy adopted has received positive feedback from the market, further increasing the company's brand awareness and market share online and other new retail channels. 2023H1's e-commerce channel maintained a strong development momentum, with revenue exceeding 35.0 billion yuan, a year-on-year increase of more than 30.0%, accounting for about 29.0% of total revenue. New retail channels have contributed more than 30%, 20%, and 50% of revenue to the tissue, sanitary napkin, and diaper businesses, respectively, and the share of sales is expected to rise further in the future.
Profit forecast and rating: We expect the company's net profit for 2023-2025 to be 28.91, 30.67, and 3,251 billion yuan respectively, up 50.2%, 6.1%, and 6.0% year on year. The current closing price corresponds to 2023-2024 PE 11.3 and 10.7 times. As a leading enterprise in the field of personal cleaning and care, we expect the profit level for the full year of 2023 to be repaired. Refer to the comparable company's PE valuation of 2023. The corresponding reasonable value range is 42.29~44.78 Yuan, calculated at the current exchange rate (1 RMB = 1.08 HKD), is HK$45.68 to HK$48.36, corresponding to the 2023 PS of 1.96 to 2.08 times, respectively, giving it a “better than the market” rating.
Risk warning: The decline in raw material costs falls short of expectations, market development falls short of expected risks, and market competition continues to increase risks.