Introduction to this report:
The company's new products still have sufficient potential for growth and increase holdings.
Key points of investment:
As overall demand in the industry is slowly recovering, the company is actively responding through platform-based cost reduction, etc., and new products are continuously launched, and performance is expected to continue to grow. Considering that competition in the industry is still fierce, we lowered 2024-2025 and added a profit forecast for 2026. We expect EPS to be 0.62/0.74/0.85 yuan (2024-2025 original value of 0.82/0.93, reduction of -32%/-26%), +22%/+15% year-on-year, referring to the same industry. Referring to the same industry, the company was given 23x PE in 2024, and the target price was lowered to 14.3 yuan, a “gain” rating.
Performance summary: The company's 2023 revenue was 9.613 billion yuan (-6%), the performance was 389 million yuan (-27%); Q4 revenue was 2,832 billion yuan (-13%), and the performance was 26 million yuan (+3%).
The company's export revenue has increased, and domestic sales have declined. In 2023, the company's export revenue was 2.239 billion yuan (+69%). After Q3, customer retail inventory was gradually digested, and the number of orders gradually increased due to strong demand, which led to a steady increase in export sales revenue. Looking ahead to 2024Q1, from the beginning of 2024 to the date of disclosure of the company's 2023 annual report, related transactions amounted to US$66 million (the amount of related transactions disclosed in the same period in 2023 was approximately US$20 million), which is still a significant increase over the previous year. In 2023, the company's domestic sales revenue was 7.374 billion yuan, of which 2023H2's domestic sales revenue was 3.98 billion yuan, -16% year-on-year.
Q4 Increased return on investment made performance grow faster than revenue, and performance was in line with expectations. 2023Q4 gross margin was 27% (-2.84pct) and net margin was 0.91% (+0.16pct). Investment income from the company's disposal of long-term equity (transfer of shares in Joyang Soybean Industry) in 2023 was +0.79 billion yuan year-on-year.
This is also an important reason why the company's 2023Q4 performance growth rate was significantly higher than the profit growth rate.
Risk warning: raw material price risk, new product performance falling short of expectations, increased market competition.