In '23, the company's revenue fell 31-35% year on year, and the net profit loss to mother was 50 to 63 million yuan, and Qingsong Co., Ltd. announced its 2023 performance forecast. The company expects to achieve revenue of 19.00 to 200 billion yuan in 2023, a year-on-year decline of 31.44 to 34.87%. After deducting revenue unrelated to the main business, it will achieve revenue of 18.68 to 1,968 billion yuan, a year-on-year decline of 31.76 to 35.23%. The large decline in revenue is mainly due to the divestment of the turpentine deep processing business, and the cosmetics business revenue declined slightly year on year.
The company's net profit for 2023 is estimated to have a loss of 50 to 63 million yuan, a year-on-year loss of 91.51 to 93.27%. Net profit after deducting non-return to mother is estimated to have a loss of 4800 to 61 million yuan, and a year-on-year loss of 91.96 to 93.68%. The company's net profit loss decreased significantly in '23, mainly due to a lower base in '22 due to impairment of goodwill.
Excluding the impact of goodwill impairment factors, the company's net profit to mother decreased by about 78.25-82.74% year-on-year in '23.
On a quarterly basis, the company's revenue declined by 42.22%, 27.70%, and 28.79% year-on-year in 2023Q1/Q2/Q3, respectively. Net profit to mother was -47.92 million yuan, -13.65 million yuan, and -218 million yuan, respectively. The amount of losses gradually narrowed. It is estimated that in 2023Q4, the company's revenue fell by about 28-41% year on year, and net profit to mother turned into a profit. It is estimated to be 75-13.75 million yuan, and the profit margin is around 2%.
Focusing on the cosmetics business in '23, Northbell achieved revenue of 1.9 to 20 billion yuan, a slight decrease over the previous year. The company completed the divestment of the turpentine deep processing business at the end of '22, and is now focusing on the cosmetics business. Northbell, a wholly-owned subsidiary of the company, is expected to achieve operating income of 1.9 to 20 billion yuan in 23, a slight decrease over the previous year, and a net profit loss of 3800 to 45 million yuan, a sharp decrease in losses over the previous year. Looking at the first half of the year, Northbell's revenue for the first half of '23 fell by 3.93% year on year, and net profit to mother decreased by 47.77% year on year. It is estimated that revenue for the second half of '23 fell by about 4 to 13% year on year, and net profit to mother reversed the loss year on year, and is estimated to be 861 million yuan to 15.61 million yuan.
Among them, the decline in revenue from the cosmetics business in 23 was mainly due to the fact that demand for masks and skincare orders from some customers has yet to recover, demand for wet wipe products in overseas markets has further weakened, and export orders for wipes have declined sharply year on year; profit-side losses were mainly due to companies strengthening the control of production materials, controlling and optimizing procurement costs, and improving production and management efficiency by further optimizing production processes and streamlining personnel.
The profit forecast was lowered, and the “neutral” rating was maintained. In 24 years, it is expected that the manufacturing leader will steadily recover as a leading cosmetics manufacturer. The company has established stable cooperative relationships with many well-known brands at home and abroad, and continues to innovate products, and has an advantage in production capacity scale. As regulations in the cosmetics industry become stricter and small and medium-sized enterprises are gradually cleared, the company's share as a leading industry leader is expected to be consolidated and increased.
Considering that there is still uncertainty in the business environment, we lowered the company's profit forecast for 2023-2025 (23 net profit to mother was lowered to loss from the previous one, down 72%/48% in 24/25), the corresponding EPS for 2023-2025 was -0.11, 0.11, and 0.29 yuan, respectively, and PE for 24 and 25 was 41 times and 15 times, respectively, maintaining a “neutral” rating.
Risk warning: Consumption is weak, cosmetics manufacturing business orders fall short of expectations; raw material costs have risen sharply.