Revenue in '23 increased by 14.01%, net profit to mother increased by 15.27%. In '23, the company published an annual report, and achieved revenue of 2,340 million yuan (yoy +14.01%) in '23, and net profit of 0.52 billion yuan (yoy +15.27%), lower than our previous expectations ($131 million), mainly due to the year-on-year decline in gross margin under pressure from wood-based panel prices, and the company's estimated asset impairment of 17.32 million yuan (yoy +134.18%). Add The higher rate was mainly due to the high non-recurring revenue base in '22. Considering that downstream demand is still recovering, and industry competition has intensified, we lowered our revenue forecast. We expect net profit to be 0.92/1.11/132 million yuan in 24-26 years (the previous value was 1.56/179 million yuan), corresponding EPS was 0.08/0.10/0.12 yuan, and BPS was 2.58/2.68/2.79 yuan. Referring to the company's 1.18 times PB (LF) average since 2020, the target price was 1.18 times PB for 24 years, with a target price of 3.04 yuan (previous value) 3.47 yuan), maintaining the “gain” rating.
Wood-based panel sales are growing steadily, and the average sales price is under pressure
By business: 1) In terms of wood-based panels, against the backdrop of overall weak industry demand in 23, the company actively developed new customers, developing 66 new chipboard customers and 55 fiberboard customers throughout the year, driving steady revenue growth. In terms of split volume and price, wood-based panel revenue also increased 16.26% to 2,275 billion yuan. In terms of split volume and price, sales volume also increased 26.27% to 1,612,900 cubic meters. However, due to increased competition in the industry, the average sales price dropped 7.93% year-on-year to 1410.26 yuan/cubic meter; the company is expected to continue to drop 7.93% year-on-year to 1410.26 yuan/m3. Deeply cultivate existing customers+develop new customers, expand scale advantages, and increase market share. 2) In terms of afforestation, forest revenue in '23 fell 24.05% year-on-year to 55 million yuan, and business contracted.
There was a slight decline in gross margin year on year. Under cost reduction and fee control, the cost ratio declined year-on-year, and gross sales margin fell 0.24 pct to 7.8% year on year. We judge that it was mainly due to pressure on wood-based panel prices and a decline in the share of revenue from the forest business with high gross margin. The cost ratio also decreased by 1.46 pct to 6.0% during the 23-year period. Among them, the sales expense ratio increased by 0.14 pct to 0.8%, mainly due to increased customer development; the management+R&D cost ratio decreased by 0.45 pct to 5.3%; and the financial expenses ratio also decreased by 1.15 pct to -0.1%, mainly due to the company's repayment of US dollar loans at the beginning of the year, and the reduction in exchange losses and interest expenses. In addition, the company's net operating cash flow increased 101.13% year on year to 410 million yuan in '23, mainly due to increased money order discounts and the use of supply chain financing tools as a settlement method on the purchasing side to improve cash flow.
A leader in the wood-based panel industry, high quality and rich customer resources
On the manufacturing side, the company has 3 fiberboard factories in Nanning, Baise, and Chizhou, Anhui, and 3 chipboard factories in Nanning, Guangxi, and Huizhou, Guangdong, with a total production capacity of 1.8 million m3. At the same time, it has improved the level of refined management through intelligent manufacturing, leading manufacturing advantages. On the sales side, the company's customers are widely distributed in various fields such as customized and finished furniture, wooden floors, wooden doors, curtain products, PCB circuit boards, washing machine covers, real estate, etc., and the customer resources are high quality and rich.
Risk warning: Downstream demand falls short of expectations, raw material costs are rising, and customer growth falls short of expectations.