Incident: The company released its 2023 annual report and achieved annual revenue of 26.507 billion yuan, -15.75% (with caliber adjustments); net profit to mother of 689 million yuan, or -35.16% year over year (with caliber adjustments). Q4 2023 achieved operating income of 6.817 billion yuan, -4.65% YoY (with caliber adjustments), +8.18% month-on-month compared to Q3; net profit to mother +102 million yuan, which turned a loss into profit year-on-year, and -66.19% month-on-month compared to Q3. The company did not pay cash dividends in 2023.
In 2023, the total steel output was -4.04%, and plate spring production was +10.25%: In 2023, the company's total output of steel and plate spring products was 4.186 million tons, -3.73% year-on-year, of which steel output was 4.086 million tons, -4.04% year on year, and automobile plate spring output was 105,400 tons, +10.25% year on year. In 2023, the average price of the company's steel products was 6281.65 yuan/ton, +18.23% year-on-year, and gross profit per ton of steel was 378.40 yuan/ton, -14.17% year-on-year.
The company's plate spring production is expected to be +0.57% year over year and steel production -1.98% year over year in 2024. In 2024, the company's steel and plate spring production is expected to be 4.106 million tons, -1.91% year-on-year, of which steel production is 4 million tons, -1.98% year-on-year compared to 2023, and plate spring production is 106,000 tons, +0.57% year-on-year compared to 2023.
In 2023, the company's tonnage profit level ranked first among the target companies of the China Iron and Steel Association. In 2023, the company carried out in-depth benchmarking, using daily cost dynamics as a starting point to strengthen cost efficiency process control through vertical and horizontal benchmarking with industry comparison, historical comparison, and sibling units; carry out activities such as “horse racing” and “outperform the market” in seven areas; and aim for the best level in history, and continue to do a good job of reducing costs and increasing efficiency. In 2023, the company's tonnage profit level ranked first among the target companies of the China Iron and Steel Association.
The company insists on implementing “two upgrades” and is steadily promoting the integration of the two. The company adheres to Putt's integrated product line, follows the “low cost, differentiation and specialization” development path, and is driven by innovation. Through continuous management improvement, the company maintains leading comprehensive process level and leading profit margin for tons of steel to ensure the achievement of “two upgrades” strategic tasks, including: (1) upgrading Putt's integrated strategy and backlash strategy; (2) upgrading innovation-driven strategy.
The company's free cash flow remained positive in 2012-2023. The company's free cash flow has been positive in 2012-2023, with free cash flow of 505 million yuan in 2023; minimum ROE of 5.06% for 2012-2023 (2015), 14.37% for 2023; minimum ROIC of 4.06% for 2012-2023 (2015), and 5.54% for 2023.
Profit forecast, valuation and rating: Due to the decline in demand in the steel industry, the company's 2024-2025 net profit forecast was lowered to 54.94% and 52.68% to 7.41 million yuan and 819 million yuan respectively, and the new company's net profit forecast for 2026 was 941 million yuan. However, the company adhered to the Putt integrated product line, and the profit level of tonnage was at the forefront of the target companies of the China Iron and Steel Association, maintaining the “gain” rating.
Risk warning: demand for steel has declined sharply; raw material prices have risen sharply.