The 2023 performance was under pressure, and the company steadily promoted the release of the 2023 annual report for optical substrates and lithium battery diaphragms, achieving revenue of 1,253 billion yuan, +8.7% year on year; net profit to mother of 95.42 million yuan, -15.9% year on year; after deducting non-net profit of 56.85 million yuan, or -40.7% year over year. Non-recurring profit and loss were mainly government subsidies of $34.71 million included in current profit and loss. Corresponding to Q4 revenue of 326 million yuan, +6.5% YoY and -10.3% month-on-month; net profit to mother of 20.57 million yuan, +903.2% YoY, +45.7% month-on-month; after deducting non-net profit of 1.25 million yuan, -32.8% YoY and -89.6% month-on-month, the company's performance was under pressure due to the fact that lithium battery diaphragms were still under production capacity construction, losses on optical substrates, and year-on-year decline in exchange earnings. Based on the company's project plan and downstream demand, we lowered the 2024-2025 and added 2026 profit forecast. The net profit for 2024-2026 is 1.55 (-1.20), 2.02 (-1.46), and 253 million yuan, which corresponds to EPS of 0.53 (-0.43), 0.69 (-0.52), and 0.87 yuan/share. The current stock price corresponding to 2024-2026 is 23.3, 17.8, 14.2 times. We believe that the company is steadily promoting the release of production capacity for optical substrates and diaphragms, steadily improving its overall competitiveness, and maintaining a “buy” rating.
The gross margin of reflective films and optical substrates improved in 2023, and the optical substrate and lithium battery diaphragm projects progressed steadily. In 2023, reflective films and optical substrates achieved revenue of 9.52 million yuan and 127 million yuan, +8.57% and -9.93% year-on-year respectively; sales volume was 144 million square meters and 143,000 tons, +17.37% and -4.19% year-on-year respectively; gross margins were 37.63% and -6.48%, respectively. (1) Reflective film: In 2023, the company's market share remained the number one in the world and steadily increased, and the shipment volume and gross profit margin were effectively increased by deepening formulations and processes and optimizing the product structure. (2) Optical substrates: In 2023, the company increased the share of shipments of products such as optical pre-coating films for displays, and expanded customers such as OCA release film substrates. With stable product quality and product structure adjustments, the gross margin of optical substrates improved slightly. (3) Lithium battery diaphragm: In 2023, the company's dry diaphragm products have been certified by mainstream customers and mass-produced and shipped, and the wet production line has been installed and commissioned. In addition, the company plans to produce 650 million square meters of lithium battery diaphragms for energy storage and power batteries in Hefei, a lithium battery diaphragm project with an annual output of 400 million square meters for energy storage and power vehicles in Zhoushan, and a photovoltaic film project with an annual output of 20 million square meters. Among them, the photovoltaic film project has completed product development and verification, and achieved batch shipment. We believe that with the release of production capacity for diaphragms and optical substrates, it will help the company to further expand its business scale, enhance its overall competitiveness, and lay the foundation for the company's future development and steady growth.
Risk warning: falling customer orders, fluctuating raw material prices, project construction progress falling short of expectations, etc.
