The company released its 2023 annual report. In 2023, the company's revenue was 22.426 billion yuan, up 11.27%; net profit to mother was 3,524 billion yuan, up 12.07%; EPS was 2.09 yuan, up 12.09%. The company's marketing structure continues to be adjusted, and the “two wings in one, global layout” strategy continues to advance. Maintain the company's buy rating.
Key points to support ratings
Performance grew steadily, and cash flow continued to improve. In 2023, the company's revenue was 22.426 billion yuan, up 11.27%; net profit to mother was 3,524 billion yuan, an increase of 12.07%. 2023Q4's revenue was 5.377 billion yuan, up 16.28%; net profit to mother was 768 million yuan, a decrease of 3.02%. In 2023, the company's net operating cash flow was 4.734 billion yuan, an increase of 28.76%; 2023Q4's net operating cash flow was 2,773 billion yuan, an increase of 28.31% over the same period. The company's operating cash flow continued to improve in 2023.
The company's profitability is steady, and its ability to control expenses is enhanced. In 2023, the company's gross margin was 29.88%, up 0.64pct; the net profit margin to mother was 15.71%, which was basically the same as the previous year. 2023Q4, the company's gross margin was 26.97%, a decrease of 0.47pct; the net profit margin to mother was 14.28%, a decrease of 2.84pct. In terms of period expenses, the company's expenses rate for the 2023 period was 12.49%, a decrease of 1.31pct. Among them, the sales/management/R&D/finance expense ratios were 4.24%/3.63%/4.24%/0.38%, respectively, with year-on-year changes of 0.43/-1.51/-0.08/-0.15pct. The 2023Q4 company's cost rate for the period was 11.56%, a decrease of 3.89pct. Among them, the sales/management/R&D/finance ratio was 3.95%/2.17%/5.07%/0.36%, respectively, with year-on-year changes of -0.65/-3.75/0.72/-0.21pct, respectively.
The gross margin of gypsum board and waterproofing was increased, and the Garberry reinforced paint wing was restructured. In 2023, the company's gypsum board business had a market share of about 67.6%, continuing to maintain the leading position in the industry. According to our estimates, the average unit price of the company's gypsum board in 2023 was 6.34 yuan/square meter, a decrease of 0.75%; the gross profit per unit was 2.44 yuan/square meter, an increase of 9.30%, or mainly due to a decrease in raw material costs. In 2023, the company achieved a year-on-year increase in the gross margin of the waterproof membrane business through various measures such as procurement and exploration, raw material substitution, optimization of production lines, formulations, and management. At the end of 2023, the company carried out a joint restructuring with Gabriel to reinforce the paint wing business. On February 29, 2024, Garberry officially merged.
The marketing structure continues to be adjusted, and the global layout is advancing at an accelerated pace. The company continues to implement the transformation from industrial products to consumer goods, continue to extend the industrial chain, further expand the new “gypsum board +” category, and at the same time deepen the home improvement business channel to strengthen the decline in the county and township-level markets. The company has strengthened its development around emerging international markets such as Africa, Central Asia, the Middle East, and Southeast Asia, and the international business layout is progressing steadily.
valuations
Considering the optimization of the company's marketing structure and the improvement of business synergy, we slightly raised our profit forecast. The company's revenue for 2024-2026 is estimated at RMB 255.4, 29.5.0, and 33.62 billion yuan; net profit to mother of RMB 4.40, 52.2, and 5.86 billion yuan; EPS of RMB 2.60, 3.09, and 3.47, respectively; and PE of 10.5, 8.9, and 7.9 times, respectively. Maintain the company's buy rating.
The main risks faced by ratings
Business collaboration fell short of expectations, downstream demand growth fell short of expectations, and raw material prices rose above expectations.