Incidents:
The company released its 2023 annual report. In 2023, it achieved revenue of 5.986 billion yuan +10.6% year on year, net profit to mother of 181 million yuan to reverse year-on-year losses, and net profit of 180 million yuan after deducting net profit of 180 million yuan year-on-year.
Comment:
Operating indicators improved in 2023, and profit margins rebounded. The company sold 252,400 tons of aluminum profiles in 2023, up 8.99% year on year; net operating cash flow of 270 million yuan changed from negative to positive. In Q4 2023, revenue of 1,744 billion yuan was achieved +41.8% year-on-year, and net profit of 57 million yuan to mother reversed year-on-year losses. For the full year of 2023, the gross profit margin increased by 12.61% year on year by 2.40 pct, and the net profit margin increased by 3.03% year on year by 5.10 pct.
The automotive lightweight business is developing and expanding smoothly. In 2023, the automotive lightweight aluminum profile business had sales revenue of 1,272 billion yuan +36.31% year-on-year, increasing the revenue share by 5 pcts to 21.24%; achieving a gross sales margin of 16.31%, an increase of 4.36 pcts over the previous year. The company is one of the largest new lightweight aluminum-based materials companies for automobiles in South China. Its products include battery trays, anti-collision beams, subframes, motor components, shock absorbers, and power brackets. 70 new fixed-point projects were introduced during the year. By the end of 2023, the company had obtained more than 300 fixed-point projects in the field of automotive lightweighting.
The system door and window business performed brilliantly. In 2023, the sales revenue of the company's system door and window business was 503 million yuan +54.79% year-on-year, accounting for 8.40% of revenue. The company's own “Becklow” brand door and window system is a traditional model innovator in China, solving the current industry pain points of scattered demand and uneven quality in the door and window market. According to the test results of the Guangdong Institute of Building Research, compared with traditional doors and windows, using Becklow system doors and windows in summer in the South China region where the company is located can reduce the electricity consumption of air conditioning by more than 20%, which can effectively reduce the energy consumption of buildings.
The new production capacity for aluminum alloy profiles is about to be put into operation. The company actively promoted the construction of convertible bond raising projects in 2023. In order to make better use of raised funds, the original fund-raising project “High-end Energy-saving System Door and Window Curtain Wall Production Base Construction Project” was changed, with an annual output of 20,000 tons of aluminum alloy profiles and 2 million sets of components. The new project had a total investment of 220 million yuan. It has invested 100 million yuan by the end of 2023, and is expected to be put into operation in the first half of 2024.
Maintain an “Overweight” rating. Considering that the recovery of the real estate chain fell short of previous expectations, the profit forecast for 2024/2025 (previous value was 300 million yuan/420 million yuan) is expected to be 68/75/8.2 billion yuan, +13%/11%/9% year on year; net profit to mother is 2.5/30/ 350 million yuan, +38%/20%/17% year over year, corresponding PE is 20/17/14 times.
Risk warning: downstream demand falls short of expectations, raw material prices fluctuate, and the company's performance falls short of expectations