Core views:

The company announces 2023 annual report. According to financial reports, in 2023, the company achieved revenue of 9.666 billion yuan, +1.00% year-on-year, net profit to mother of 685 million yuan, +4.13% year-on-year, and net profit of 705 million yuan after deduction of non-return to mother, +16.42% year-on-year. Q4 achieved revenue of 2,332 billion yuan, +14.44% year over year, net profit to mother of 233 million yuan, +9.26% year over year, net profit after deducting non-attributable net profit of 290 million yuan, +37.17% year over year. The growth rate was faster than net profit and loss adjusted for non-recurring profit and loss of 20 million yuan due mainly to changes in accounting standards. According to the company's profit distribution plan announcement, the 2023 profit distribution plan is to distribute a cash dividend of 3 yuan (tax included) for every 10 shares.

Profitability continued to improve, and expenses remained stable during the period. The company's gross margin/net margin/net net margin in 2023 was 13.79%/8.02%/7.30%, +0.68/0.24/1.18pct; sales/management/R&D/finance expenses ratio 1.27%/1.95%/1.91%/-0.37%, +0.05/0.19/-0.07/-0.11pct year over year. Q4 The company's gross sales margin/net margin was 16.11%/11.41%, -1.63/-0.51 pct year on year.

In 2023, leading industries in the printing and dyeing industry recovered, and the gold jewelry business grew steadily. According to financial reports, the company's printing and dyeing business achieved total revenue/profit of 37.93/580 billion yuan in 2023, -0.54%/+1.77% year-on-year, profit margin 15.29%, +0.35pct year-on-year, 10.63pct higher than the industry's sales profit margin, mainly due to the company's efforts to optimize products and expand the market. According to financial reports, in 2023, the company's gold jewelry business achieved revenue of 53.32 billion yuan, +5.70%/14.49% year on year, sales profit margin 2.45%, +0.29pct year on year, gold jewelry processing and sales 69.74 tons, +2.08% year over year. The growth was mainly due to the company actively developing new products, saving resources, reducing costs and increasing efficiency.

Profit forecasting and investment advice. EPS is expected to be 0.77 yuan/share, 0.87 yuan/share, and 1.00 yuan/share in 2024-2026, respectively. The company will continue to adhere to the “textile printing+gold jewelry” dual business. Referring to the average PE and comparable company valuations in the past three years, the company will give it 13 times PE in 2024, corresponding to a reasonable value of 9.95 yuan/share, and maintain a “buy” rating.

Risk warning. Risk of fluctuations in raw materials, risk of fierce market competition, risk of sluggish demand.