Maintain an “Overweight” rating. Revenue in 2023 was 22.426 billion yuan, up 11.27%. Net profit to mother was 3,524 billion yuan, up 12.07%. In line with expectations, the dividend rate of 40% returned to the highest level in nearly 20 years, and exceeded market expectations, maintaining the company's 2024-2026 EPS of 2.68, 3.65, and 4.01 yuan, maintaining a target price of 35.22 yuan, maintaining an “increase” rating.
Costs drive up the price market or form a trend. We estimate that Q4's gypsum board sales volume may be 520 million square meters, an increase of about 4.6%. However, the total demand side remains relatively stable, and the structure is undergoing profound changes. Demand for home decoration and renovation has increased markedly. 23Q4-24Q1 has brought about a rise in the price of raw materials such as protective paper, and the channel is more willing to take goods, and the channel has a higher willingness to take goods, and determine that there is a positive cycle or continuous room for further price increases.
Under the low waterproof base, H2 revenue accelerates, and the supply chain improves or spreads to coatings. H2's waterproof business revenue was 1.94 billion yuan, up 33%. The revenue growth rate accelerated or was mainly affected by the low base. The gross profit margin increased 1.8 pct year over year. Against the backdrop of increased competition in the industry, the improvement in gross margin reflected substantial improvements in supply chain cost control and enhanced competitiveness. It is expected that this strategy to improve supply chain competitiveness will continue to be reflected in the expansion of products in other fields such as coatings.
The dividend rate reached a 20-year high, and strong shareholders' returns are expected to be maintained. The company announced a dividend rate of 40% for 2023, the highest level in nearly 20 years, exceeding market expectations. We expect that although the company will adopt a rapid development model combining epitaxial and endogenous growth in the future, the company's high shareholder feedback will be maintained under the cash flow advantage, and it is expected that the dividend rate will remain high after increasing.
Risk warning: Macroeconomic downturn, raw material costs rising.