Incidents:
The company released its 2023 annual report, achieving revenue of 7.802 billion yuan +2.0% year-on-year, net profit of 324 million yuan +393.9% year-on-year, and net profit of non-return to mother of 289 million yuan +650.8% year-on-year.
Comment:
Performance has recovered steadily. The company achieved revenue of 1.35 billion yuan/2.0 billion yuan/2.19 billion yuan/2.25 billion yuan, +4.8%/+2.5%/+0.6% year-on-year, and realized net profit to mother - 60 million yuan/0.7 billion yuan/130 million yuan/180 million yuan, reducing losses by 37.3%/+1563.0%/+46.5%/+193.6% over the same period last year. The gross profit margin for the whole year was 32.26%, an increase of 2.06 pct over the previous year; the net profit margin was 4.49%, an increase of 3.35 pcts over the previous year.
Prices of key ingredients fell in 2023. In terms of raw material prices, according to Wind statistics, the average price of domestic zinc alloy in 2023 was about 22,300 yuan/ton, down 14.0% year on year; the average settlement price of stainless steel futures was 15,200 yuan/ton, down 14.3% year on year; and the average price of domestic aluminum alloy was 19,500 yuan/ton, down 8.2% year on year.
Other construction hardware products are growing at a high rate. The categories that contributed the highest in the company's revenue in 2023 were door and window hardware systems/furniture products/other construction hardware products, accounting for 46.0%/17.8%/14.4% respectively. Among them, other construction hardware products contributed 1.13 billion yuan +20.3% year-on-year, making it the category with the highest growth rate.
Sales cost rate pressure dropped. The company's 2023 sales expense ratio dropped 0.6 pct to 16.1%, and the financial expense ratio pressure dropped 0.3 pct to 0.3%. Currently, the company has more than 1,000 domestic and foreign sales networks and a sales team of more than 6,000 people. Future plans will continue to sink according to the actual situation.
Solid cash flow. The company achieved a net operating cash flow of 500 million yuan in 2023, or -46.6% year-on-year, mainly due to an increase in the company's purchases of products. The company achieved an annual cash inflow of 8.53 billion yuan from operating activities, with a revenue ratio of 1.083, an increase of 0.086 over the previous year, the highest level in history.
Maintain an “Overweight” rating. Revenue from 2024 to 2026 is expected to be 8.99 billion yuan/10.68 billion yuan/12.59 billion yuan, up 15%/19%/18% year on year, and net profit due to mother is 540 million yuan/750 million yuan/1.01 billion yuan, up 67%/38%/35% year on year (taking into account the slow recovery pace of real estate demand and the actual improvement in cost rates during 2023, this is down from the pre-forecast value of 620 million yuan/870 million yuan in 2024/2025).
Risk warning: downstream demand falls short of expectations, raw material prices fluctuate, and performance falls short of expectations