Key points of investment:
The company released its 2023 annual report, and the performance was in line with expectations. In 2023, revenue was 9.116 billion yuan, down 5.1% year on year; net profit due to mother was 550 million yuan, down 7.2% year on year; net profit after deducting non-net profit of 565 million yuan, up 7.7% year on year; of these, Q4 revenue was 1,782 million yuan, down 24.4% year on year, net profit to mother was 109 million yuan, down 36.4% year on year, after deducting non-net profit of 128 million yuan year on year, down 15.3% year on year. The company's net operating cash inflow in 2023 was 2,696 billion yuan, up 253.3% year on year, of which 2023Q4 alone was 1,998 billion yuan, up 589.4% year on year, mainly due to advance receipt of housing payments. The company paid 0.25 yuan per share, and the dividend rate reached 67.8%. Based on the latest closing price of 5.20 yuan/share, the dividend rate is 4.8%.
The main packaging industry has a steady foundation, actively developing new products, new customers and new fields to achieve steady growth; aluminum-plastic film sales have maintained rapid growth, and unit prices and profitability have been dragged down by increased competition, and we look forward to subsequent optimization of the competitive landscape.
1) Beverage packaging business (including PET bottles and preforms, crown caps and labels, plastic anti-theft caps, OEM beverages):
Revenue of 4.418 billion yuan was achieved in 2023, an increase of 1.5% over the previous year. 2023Q4 revenue declined, mainly due to the late Spring Festival in 2024, and delays in preparing goods for downstream customers. In 2023, the beverage packaging industry cluster consolidated strategic major customer markets, and closely followed the pace of a new round of investment from COFCO, Taikoo Cola, Dongpeng Drinks, etc., adjusted the production capacity structure, laid out emerging markets, and expanded market share in North China, Northwest China, Southwest China and South China. The company continues to strengthen the development of emerging brand customers and the three new project markets, and has achieved significant growth in the non-beverage PET bottle and bottle preforms market for condiments, dairy products, and daily chemicals. The beverage OEM division achieved growth in strategic customers such as Unification, Danone, and Cola. The development of small and medium-sized customers for tea and plant-based beverages was also very effective. Sales increased 19.4% year-on-year in 2023. Ziri Packaging maintained continuous growth in sales for strategic customers such as Liangle, Danone, Yibao, and Dongpeng Drinks. It developed hundreds of small and medium-sized customers, and achieved sales of 13.9 billion plastic anti-theft covers throughout the year, an increase of 13.7% over the previous year.
2) Soft packaging new material business (spray aluminum paper and cardboard, PA/PE film, color paper packaging printing, excluding aluminum-plastic film):
Revenue of 2,552 billion yuan was achieved in 2023, up 1.8% year over year. In 2023, the sales revenue of the paper packaging division increased 8.5% year-on-year. On the basis of consolidating cooperation with well-known tea drinks such as Ice City and Coco, the paper cup business entered well-known coffee brands such as Costa, and well-known cosmetics customers such as Dior, Henkel, and Freda are stabilizing. At the same time, the paper bag, lunch box and foreign trade business continues to develop. Zijiang color printing sales increased 8% year on year, strategic customers achieved a 5% year-on-year increase in sales, new customer sales reached 25 million, and new product sales reached 10 million.
3) Aluminum-plastic film: In 2023, it achieved revenue of 707 million yuan, a year-on-year increase of 1.7%, sales volume of 51.66 million square meters, a year-on-year increase of 22.7%, and a single flat price of 13.69 yuan, a year-on-year decrease of 17.2%. The aluminum-plastic film business was affected by cost reduction in the lithium battery industry chain. The unit price and net profit declined in 2023, but thanks to the company's high capacity utilization rate, leading production process, and localization of raw materials and equipment, the company's profitability is still clearly ahead of its peers, and its competitiveness is outstanding. Following the optimization of the competitive landscape of the industry, the profitability of aluminum-plastic film is expected to pick up.
Real estate and trade business losses are expected to gradually narrow. 1) Real estate: Zidu Shanghai Jingyuan Phase III North District 68 villas began the subscription process in October 2023. By the end of 2023, more than 50 villas had been pre-sold and pre-paid. The company's contract debt at the end of 2023 was 1,522 billion yuan, an increase of 1,448 billion yuan over the previous year. The company's net operating cash inflow in 2023 was 2,696 billion yuan, up 253.3% year on year, of which 2023Q4 alone was 1,998 billion yuan, an increase of 589.4% year on year, mainly due to advance receipt of housing payments. In 2023, the real estate subsidiary Zidu Sheshan Real Estate lost 54.93 million yuan. Subsequently, as advance housing payments are gradually converted into revenue, real estate business profits are expected to improve significantly. 2) Commerce: The company continued to shrink its commercial and trade business scale, from a peak of 1,790 million yuan in 2019 to 691 million yuan in 2023. The commercial and trade business lost 89.48 million yuan in 2023, a decrease of 50.21 million yuan compared to 2022. It is expected that it will continue to be optimized in the future.
The main packaging industry has created a new growth curve and returned to an upward channel by expanding products, expanding customers, and expanding fields; sales in the aluminum-plastic film business grew steadily, and profitability is expected to recover after subsequent competition eases; the real estate and trade business had large losses in the early stages, and the scale of the commercial and trade business is expected to improve in the future as sales of Jingyuan Phase III North District commence and the scale of the commercial and trade business shrinks. Considering the intensification of competition in the aluminum-plastic film industry, we slightly lowered the company's 2024-2025 profit forecast to 712/815 million yuan (previous value: 829/955 million yuan), added the 2026 profit forecast of 888 million yuan, and net profit to the mother increased 27.2%/14.5%/9.1% year-on-year respectively. The PE corresponding to the current market value is 11/10/9X, maintaining the “buy” rating.
Risk warning: The price of raw materials has risen, and competition for aluminum-plastic film has intensified.