23 Revenue/net profit ratio -4.0%/+9.9%, maintaining the “increase” of Ruitai Technology's annual report, and achieved revenue/net profit of 4.629 billion yuan/72.8 million yuan (yoy -3.95%/+9.91%) in 23. Among them, Q4 achieved revenue/net profit of 1,280 million yuan/24.37 million yuan (yoy +6.11%/+22.36%, qoq +15.02%/+50.95%). Net profit returned to mother in '23 was slightly lower than our previous forecast ($74 million), mainly affected by weak aggregate demand in the downstream industry. We expect the company to maintain steady growth in 2024-2026, with EPS of 0.35/0.39/0.43 yuan respectively (previous value of 0.43/0.54/-2026). Comparatively, the company's 24-year Wind unanimously expected an average PE value of 10.7 times. Considering that the company is a leader in refractory materials for glass kilns, benefiting from the restoration of the glass industry, the central enterprise's background support gave the company 25 x PE in 24 years, with a target price of 8.70 yuan (previous value of 12.22 yuan) to maintain “increased holdings”.
Refractories revenue was under slight pressure in '23, and costs declined year over year
In '23, the company achieved revenue of 641/8.78/2,864 billion yuan of refractory materials for glass kilns, respectively, or 6.21%/-19.79%/1.10%. Against the backdrop of declining overall demand in the downstream steel and building materials industries, revenue from glass kilns and steel refractory materials continued to grow positively.
The sales volume/cost ratio of the company's refractory materials for glass kilns in '23 was +12.9%/+4.8%, the sales volume/cost ratio of the company's refractory materials for cement kilns was -5.4%/-18.9%, and the sales volume/cost ratio of the company's refractory materials for steel was +7.4%/+2.7%. The gross profit margin for 23 years was 16.07%, -1.0pct, with a gross margin of 18.48%/25.53%/13.05% for refractory materials for glass kilns/cement/steel, +1.12/-0.87/-1.35pct; 23Q4 gross profit margin 16.34%, same as -2.8/+1.7pct month-on-month.
The 23-year expense ratio decreased slightly year-on-year, and the net interest rate to the mother increased by 12.60% year-on-year, and -0.31pct year-on-year. Among them, the sales/management/R&D/finance expenses ratio was 2.70%/5.05%/3.79%/1.05%, and -0.33pct/0.10pct/-0.07pct/-0.01pct. The decrease in the financial expense ratio was mainly due to the company strengthening budget management and strict control of expenses. Net profit margin in '23 was 1.57%, +0.20pct year over year; 23Q4 was 1.9%, +0.3pct/month-on-month. At the end of 23, the company's balance ratio/interest-bearing debt ratio was 70.1%/25.3%, -2.9/-3.2pct year-on-year. Net operating cash flow in '23 was 185 million yuan, or -35.35% year-on-year, of which 23Q4 was 180 million yuan.
Aggregate demand may continue to decline, and deep heritage and intelligent innovation help the company continue to lead the company's 2024 plan to achieve total revenue/profit of 48/190 million yuan, +3.4% over the same period last year. In 2023, the downstream steel and cement industry of refractory materials was sluggish. According to the China Refractory Association, 91 enterprises achieved profits of 2,794 billion yuan from January to September 2023, a year-on-year decrease of -19.4%. We believe that with the decline in aggregate demand and the increase in the level of intelligent manufacturing in the industry, the “stock game” among refractory companies may gradually intensify. The company is a refractory company with a central enterprise background. It ranks among the top in the industry. It is in a leading position in terms of technical level, innovation ability, and brand influence, and is expected to maintain steady scale growth.
Risk warning: The steel/cement/glass industry is declining, costs have risen sharply, and the balance ratio continues to be high.