Yearly revenue/net profit to mother +11.3%/+12.1% YoY, maintaining “buying”
The company released its annual report for the year 23: net profit/net profit without return to mother of 224.3/35.2/3.50 billion yuan in 23, +11.3%/+12.1%/+31.8% over the same period, in line with our expectations ($3.56 billion); 23Q4 revenue/net profit/net profit deducted from non-attributable mother of 53.8/7.8/790 million yuan, compared with +15.0%/-3.4%/+117.3%. The sharp increase in net profit after deducting net profit from non-return to mother was mainly due to the fact that 22Q4 had a net asset disposal income of 440 million yuan. Without considering the impact of factors such as epitaxial mergers and acquisitions, the company's net profit for 24-26 is estimated to be 43.5/49.0/5.41 billion yuan, which is comparable to the company's 24-year average expectation of 13xPe. We believe that the company's consumer goods logic continues to be implemented, the main gypsum board business maintains steady growth, and the implementation of mergers and acquisitions and incentives is expected to accelerate the “integrated two wings” layout, with a target price of 35.98 yuan for 24 years, maintaining the “purchase”.
The main gypsum board business grew steadily, and the decline in cost led to a year-on-year increase in gross margin for the year 23. The company's gypsum board production/sales volume was 21.65 billion square meters, respectively, +3.3%/+3.8% compared to the same period last year.
By business, the company's gypsum board/keel/waterproof membrane/ coating/other revenue was 138/23/28/10/2.2 billion yuan, +3.0%/-9.1%/+29.0%/+22.4%/+149.6%. The main gypsum board business remained steady, and the waterproof coating and “gypsum board+” business continued to grow rapidly. The company's overall gross profit margin in '23 was 29.9%, +0.7pct. Among them, gypsum board/waterproof membrane gross margin was 38.5%/18.7%, respectively, +3.5/+1.5pct, which mainly benefited from lower raw material costs, while the average price remained stable throughout the year. Looking at the segment, the net profit of the 23 young quality building materials/waterproof building materials/paint building materials division was 3.42/1.5/0.4 billion yuan respectively, +8.3%/+250 million yuan/ +30.9% compared with the same period last year. The waterproof division turned a loss into a profit.
The cost ratio for the 23-year period was -1.3 pct year on year, and the net operating cash flow continued to perform well. The company's expense ratio was 12.5% and -1.3 pct year over year. Among them, the sales/management/R&D/finance expenses ratio was 4.2%/3.6%/4.2%/0.4%, +0.4/-1.5/-0.1/-0.2 pct year on year, and the management expense ratio continued to be optimized. The company's net profit margin in '23 was 15.7%, +0.1 pct year on year, 14.3% in 23Q4, and -2.8/-1.0 pct month-on-month. It is expected to be affected by the price drop in the fourth quarter. At the end of 23, the company's balance ratio/interest-bearing debt ratio was 22.6%/9.6%, -2.4/+2.8pct year-on-year. The company's net operating cash flow in '23 was 4.73 billion yuan, +29.2% year-on-year. Cash flow continued to perform well. Among them, the paint division's cash flow improved significantly.
Implement the action plan to double improve quality return, and increase the dividend rate to 40%. In March 24, the company issued an action plan to improve both quality return, and proposed five measures to focus on the main business and accelerate the implementation of the “two wings in one, global layout” development strategy. Meanwhile, the company plans to distribute a cash dividend of 8.35 yuan for every 10 shares in '23. The dividend ratio will increase from 35% in '22 to 40%, fully rewarding investors. By the end of '23, the company's gypsum board/waterproof/keel production capacity reached 3.50 billion flats/456,000 tons, and built a 50,000 ton industrial coating production base for lighthouse coatings in Nangang, Tianjin. At the same time, the company has completed the joint restructuring of Gabrielle. The completion of this merger and acquisition is expected to help the rapid development of the company's paint business, and the “two wings in one” layout will gradually improve.
Risk warning: the price increase of raw materials exceeded expectations; the integration of the waterproof business fell short of expectations; mergers and acquisitions fell short of expectations.