Report summary:
“Ceramic+Big Home” dual tracks run in parallel. The company was founded in 2000 and is headquartered in Foshan, Guangdong. It has three manufacturing bases in Foshan, Guangdong and Quanjiao, Anhui. It is an enterprise specializing in the production of environmentally friendly high-end decorative materials and automotive interior materials. The company went public on A-share listing in 2017 and acquired Ruixin Packaging and Eagle Ceramics in 2021. In the first three quarters of 2023, the company's revenue from building ceramics, automotive interior finishing materials, fireproof panels, home decoration materials and other business segments accounted for 51%, 15%, 9%, 8%, and 17%, respectively.
Net profit for the full year of 2023 was 110 million yuan to 130 million yuan, and net profit after deducting non-return to mother was about 64 million yuan to 84 million yuan. Among them, orders for architectural ceramic products increased, and revenue increased by about 21% year on year; revenue from automotive interior finishing materials increased by about 15% year on year, and gross margin increased by about 2% year on year; revenue of fireproof board products increased slightly, and gross margin increased by about 6% year on year, mainly due to the increase in domestic sales of high-margin products. The amount of the company's non-recurring profit and loss in 2023 was about 46 million yuan. The main reasons for the increase: 1. During the reporting period, the company performed accounting treatment for real estate clients' debt-loss properties in accordance with debt restructuring standards to confirm debt restructuring gains; 2. The operating performance of the company's foreign shareholders improved during the reporting period, and income from changes in fair value increased; 3. Increased government subsidies included in current profit and loss during the reporting period.
The pressure on the size of accounts receivable has decreased, and cash flow is healthy. The size of the company's accounts receivable has shown a continuous downward trend since the end of the third quarter of 2021, falling to 550 million yuan by the end of the third quarter of 2023, a high drop of 35%, or 0.21 times the 2022 revenue. The company's net operating cash flow has continued to be positive since 2018. The net operating cash flow recorded losses in 2021/2022 was 293 million yuan/274 million yuan, respectively, and 202 million yuan for the first three quarters of 2023.
Actively carry out repurchases. On February 18, 2024, the company announced a repurchase plan. It plans to repurchase 30 million yuan to 60 million yuan at a price not exceeding RMB 8 per share; of this, 10 million yuan to 20 million yuan is necessary (sold) to maintain the company's value and shareholders' rights and interests, and the remaining shares will be used for equity incentives or employee stock ownership plans. According to the company's subsequent announcement, as of February 29, 2024, the company has not carried out a share repurchase.
Covered for the first time, a “gain” rating was given. Operating revenue from 2023 to 2025 is expected to be 3.15 billion yuan/3.60 billion yuan/4.01 billion yuan, with a year-on-year growth rate of 16%/14%/12%, and net profit to mother of 120 million yuan/155 million yuan/182 million yuan. The year-on-year growth rate is reversed/29%/17%, corresponding PE is 16.5/12.8/10.9 times.
Risk warning: industry competition intensifies, repayment risk, company performance falls short of expectations