Net profit without return to mother increased year-on-year in 2023. Optimistic about the continued release of new products and demand, the company released the 2023 annual report. It achieved annual revenue of 2.0 billion yuan, a year-on-year increase of 2.43%, achieved net profit of 71 million yuan, a year-on-year decrease of 51.03%, and realized net profit of 74 million yuan without return to mother, an increase of 507.44% over the previous year. Among them, the company's sharp year-on-year decline in net profit was mainly due to factors such as confirming net income from land and real estate collection and storage of 159 million yuan, loss of 20 million yuan due to changes in fair value for overdue payment trust products, and loss of 20.62 million yuan for subsidiary Amway Vietnam. We maintain 2024-2025 and add the 2026 profit forecast. We expect the company's net profit to be 1.86, 2.60, and 329 million yuan, respectively, and EPS of 0.86, 1.20, and 1.52 yuan, respectively. The current stock price corresponds to PE 15.6, 11.1, and 8.8 times, respectively.
We are optimistic that the company, as a leader in the domestic PU leather industry, will fully benefit from the continued increase in demand for new TPU products and new energy vehicles in the future, and maintain a “buy” rating.
The company's profit improved quarter-on-quarter in 2023. Looking at the volume profit of PU leather products, 2023Q1-Q4's gross sales margins were 17.30%, 19.73%, 22.27%, and 23.07%, respectively, and net profit after non-return to mother was -0.18, 0.09, 0.38, and 0.45 billion yuan respectively; benefiting from the rapid increase in emerging demand represented by the company's TPU products and new energy vehicles, both showed a quarter-on-quarter upward trend. In terms of sales, the company sold 61.14 million meters of PU leather in 2023, an increase of 5.90% over the previous year. In terms of profit, in 2023, the company's PU leather ton revenue was 32.2 yuan/meter, down 0.15% year on year; operating cost per ton was 25.4 yuan/meter, down 5.58% year on year; gross profit per ton was 6.8 yuan/meter, up 27.45% year on year.
New demand and the release of new products, combined with the improvement in profits at the Vietnam base, are expected to provide an increase in the company's performance. According to the company's announcement, the current trend of emerging demand for automotive interiors, electronic products, sports equipment, and engineering decoration is improving, and it is expected to contribute an important profit increase to the company in the future. At the same time, the influence of new TPU products on high-end sports brands at home and abroad is increasing, and future shipments may continue to grow. Furthermore, with the gradual increase in customer orders and the gradual release of production capacity, Amway Vietnam's sales volume in the second half of 2023 increased by about 316% compared to the first half of the year, and its overall profit is expected to improve in 2024.
Risk warning: Downstream demand falls short of expectations, large fluctuations in raw material prices, large fluctuations in energy costs, etc.