Honglu Steel released its 2023 annual report. According to the annual report, in 2023, the company achieved revenue of 23.539 billion yuan, 18.60%; net profit to mother of 1,179 million yuan, 1.43%; deducted non-net profit of 884 million yuan, -4.72% year on year; in 23Q4, the company achieved revenue of 6.571 billion yuan, 21.17% year on year; net profit to mother of 290 million yuan, 0.43% year on year; net profit of 175 million yuan, -14.99% year on year. In terms of cash flow, there was a net operating cash flow of 1,098 million yuan in '23, a net inflow of 622 million yuan; a net inflow of $345 million in 23Q4 and a net inflow of $42 million in 22Q4. According to the dividend plan, the company increased its cash dividend for 23 years to 357 million yuan (30% dividend rate).
Production increased steadily, and net profit per ton was under pressure due to a decline in downstream prosperity. According to the company's operating data announcement, 23-year output 4.88,000 tons, 28.4% year on year; 23Q4 output 1.257 million tons, +21.4% year on year; sales volume: 23-year sales volume 4.257 million tons, 30.6% year on year; net profit per ton in 23 years (net profit to mother) 277.1 yuan/ton, year-on-year -79.8 yuan/ton; net profit for 23 tons (net profit from mother) 262.8 yuan/ton, year-on-year -69.9 yuan/ton; 23Q4 tons net profit (net profit to mother) Production) 230.9 yuan/ton , 48.1 yuan/ton; net profit of non-ton: net profit of non-ton in 23 years (minus non-net profit/sales) of 205.3 yuan/ton, year-on-year -76.2 yuan/ton; 23 years of non-ton net profit (after deducting non-net profit/production) of 194.7 yuan/ton, year-on-year -67.7 yuan/ton; 23Q4 deducted non-ton net profit (after non-net profit/production) of 139.3 yuan/ton, year-on-year. Net profit per ton is under pressure due to low downstream prosperity. We look forward to future improvements in demand and improvements in operating efficiency after intelligent upgrades.
The company still has the advantage of scale, and the intelligent upgrade is worth paying attention to. After the inflection point in demand, volume and price are expected to rise sharply. In terms of “volume”, the company's production capacity will continue to grow, and the cost advantage will be strengthened by scale. In terms of “price,” the application of intelligent industrial welding robots and laser cutting machines will further increase the company's degree of industrialization.
Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 13.34/15.34/1,745 billion yuan respectively. Referring to comparable company valuations, the company is given 13 times PE in 24 years, corresponding to a reasonable value of 25.13 yuan/share, maintaining a “buy” rating.
Risk warning: steel prices fluctuate; new orders fall short of expectations; net profit per ton continues to decline.