The company released its 2023 annual report: In 2023, it achieved revenue of 22.426 billion yuan, +11.27% year-on-year, net profit to mother of 3.524 billion yuan, +12.07% year-on-year, net profit of non-return to mother of 3.495 billion yuan, +31.75% year-on-year. Among them, 23Q4 revenue was 5.377 billion yuan, +16.28% year on year, net profit to mother of 768 million yuan, -3.03% year over year, after deducting non-net profit of 787 million yuan, +117.40% year over year. In 2023, the company's gross margin was 29.88%, +0.64pct year on year, net margin was 15.85%, +0.08pct year on year; 23Q4 gross margin was 26.97%, -0.47pct year on year and -5.03pct month on month.
Strengthen and expand the main business, and improve the profitability of gypsum board
The company promoted the four major transformations of “tooling to home improvement, cities to counties and villages, base materials to surface materials, and products to services”. The 2023 Young Quality Building Materials Division achieved revenue of 18.129 billion yuan, +8.82% over the same period last year, of which:
In terms of gypsum board business, the company's market share ranked first in China, achieving revenue of 13.766 billion yuan, +3%; gypsum board sales volume of 2.172 billion square meters, +3.78% year on year; gross margin of 38.49%, +3.54 pct year on year; keel business achieved revenue of 2,290 billion yuan, -9.05% year on year, gross margin of 18.70%, -0.24pct year on year; other gypsum board+ businesses grew rapidly, achieving revenue of 2,073 billion yuan, +167% year over year.
Accelerate the expansion of the two wings business. In terms of merging and opening the paint wing's waterproofing business in 2024, Gabriel achieved revenue of 3.03 billion yuan in 2023, +24.12% over the same period last year. By the end of the year, it had a production capacity of 430 million square meters of waterproof materials, and more than 1,300 new development channels throughout the year.
The paint business achieved revenue of 394 million yuan in 2023, +12.08% year-on-year. In 2023, the transfer of the remaining 51% of Lighthouse Coatings was completed. While improving the layout of industrial coatings, they also jointly restructured Garboree to expand architectural coatings. Gabrielle merged on February 29, 2024.
Good cost control, excellent cash flow, increased dividend ratio
The company continued to increase its marketing investment. The sales expense ratio in 2023 was 4.24%, +0.42pct year on year. Other cost aspects were well controlled. The management cost ratio, R&D cost rate, and financial cost ratio were -1.51/-0.07/-0.15 pct year on year, respectively. The cost rate for the 2023 period was 12.49%, or -1.31 pct year on year.
The company strengthened the control of accounts receivable and established a credit sales system with “authorization+reconciliation” and “settlement of debts+litigation” bilateral risk protection bars. The balance of notes receivable and accounts receivable as of the end of 2023 was 2.184 billion yuan, -3.30% year-on-year, accounting for 9.74% of current revenue, or -1.59pct year on year.
By the end of 2023, the company's net operating cash flow was 4.734 billion yuan, +29.20%, a record high; the revenue ratio was 1.02, -0.01 year on year; the net current ratio was 1.34, +0.17 year on year.
Excellent cash flow performance supported the company to further enhance shareholder returns, and the company increased its cash dividend ratio in 2023 to 40.03% (+4.84pct year over year).
Overseas sales have increased rapidly, and global layout has been accelerated
In 2023, overseas sales achieved revenue of 222 million yuan, +45.03% year-on-year, and overseas gross margin was 19.62%, +4.40pct year-on-year. Expanding the development of emerging international markets such as Africa, Central Asia, the Middle East, and Southeast Asia, the Tanzanian base achieved a double year-on-year increase in revenue and profit; a 40 million square meter gypsum board production line in Uzbekistan has been put into operation; a Thai company has been established, and project construction is progressing in an orderly manner; at the same time, it is strengthening the “two wings” market development of the country with existing projects.
Investment suggestions: We continue to be optimistic about Beixin Construction ① the steady progress of the “one, two wings” strategy; ② the accelerated transformation of gypsum board to “consumer goods”; ③ the waterproofing business benefits from capital cost advantages and is gradually contributing; ④ flourishing overseas. We predict that in 2024-2026, the company's net profit to mother will be 43.9 billion, 62.0, and 6.52 billion yuan, respectively. The current price corresponds to PE of 11, 8, and 7 times, maintaining the “recommended” rating.
Risk warning: New business development falls short of expectations; changes in real estate policies fall short of expectations; risk of fluctuations in raw material prices.