Company Announces 2023 Annual Report and 2024 Quarterly Report: 1) Performance: Net profit to mother in 2023, -29% year over year; 2023Q4 net profit to mother of $28 million, -78% year over year; and 2024Q1 net profit to mother of 150 million yuan, +41% year over year. 2) Revenue: Achieved 9.75 billion in 2023, -15.7% YoY; 2023Q4 revenue 2.13 billion, YoY -14%; 2024Q1 revenue 2.9 billion, +23% YoY.
3) Cost and expense side: 2023 operating cost 8.6 billion, YoY -17%; 2023Q4 operating cost 1.87 billion, YoY -15%; 2024Q1 operating cost 2.56 billion, +23% YoY; 2023Q4 three-fee ratio (management+sales+finance) 8.7%, +3 pts year over year, +5.2 pts month-on-month. 4) Profit margin: comprehensive gross profit margin of 11.8% in 2023, +0.9 pts year on year; net profit margin to mother 4.4%, -0.8 pts year on year. 2024Q1's comprehensive gross profit margin was 11.6%, +0.4 pts year over month; net profit margin 5.2%, year over year +0.6 pts; net profit margin without return to mother was 4.8%, +0.5 pts year on year, +3.5 pts month on month. 5) Cash flow: Net operating cash flow of 700 million in 2023, +15% year over year; 2024Q1 net operating cash flow - 120 million, compared with 310 million in the same period last year.
By business: 1) Integrated logistics department business: a) MGF global freight forwarding business: 2023 revenue of 2.22 billion yuan, 41% year-on-year, accounting for 23% of revenue; gross profit of 270 million yuan, gross profit margin of 12%, an increase of 0.63 percentage points over the previous year, accounting for 23% of gross profit. b) MGM Global Mobile: 2023 revenue of 650 million yuan, -33% year-on-year, accounting for 7% of revenue; gross profit of 100 million yuan, gross profit margin 16%, a year-on-year decrease of 2.67 percentage points, accounting for 9% of gross profit. c) MRW regional warehousing and distribution integration: 2023 revenue of 700 million yuan, -4% year-on-year, accounting for 7% of revenue; gross profit of 330 million yuan, gross profit margin 48%, up 1.31 percentage points year-on-year, accounting for 29% of gross profit. d) MRT regional domestic trade delivery: 2023 revenue of 1.85 billion yuan, +7% year-on-year, accounting for 19% of revenue; gross profit of 150 million yuan, gross profit margin of 8%, a year-on-year decrease of 1.28 percentage points, accounting for 14% of gross profit. 2) Chemical trading department business: MCD's different distribution: 2023 revenue of 4.32 billion yuan, -1% year-on-year, accounting for 44% of revenue. Gross profit was 280 million yuan, with a gross profit margin of 6%, an increase of 3.32 percentage points over the previous year, accounting for 24% of gross profit.
Equity incentives: The 2024 equity incentive plan accounts for 2.2% of the company's total share capital, with a total of 82 people. The performance assessment was based on 2023. The net profit growth rate for 24-27 was not less than 30%, 56%, 87%, and 125%. The corresponding net profit was 5.6, 6.7, 8.1, and 970 million yuan, respectively, compared with 30%, 20%, and 20% year-on-year respectively. The exercise price of stock options under this incentive plan is $54.20 per share (closing price of $56.66 on 2024/4/12).
Future outlook: Continuously consolidate and strengthen core business capabilities. 1) Accumulate resources from leading domestic and foreign customers, and continue to strengthen in-depth cooperation. Through more than 20 years of industry operation, the company has formed long-term cooperative relationships with many famous chemical companies at home and abroad, including BASF Group, Dow Group, Aksu Group, PPG Industry, Jotun Group, Arkema Group, Wanhua Chemical, Elang Group, Solvay Group, etc. The number of the company's customers has increased year by year. By the end of 2023, the number of the company's effective customers had exceeded 8,000. 2) Continue to strengthen digital construction and transformation. The company's information technology is widely used in warehouse management, transportation management, vehicle control and order processing. The company is determined to carry out digital transformation to meet customers' requirements for safe, accurate and timely logistics services to the greatest extent, while improving management efficiency. 3) The global layout is fully launched. The company has subsidiaries in the US, Singapore, Malaysia, etc. In 2023, MW-SG invested 22 million Singapore dollars to acquire 100% of SDL's shares, and invested 39.96 million Singapore dollars to acquire 100% of LHN's shares, further increasing Singapore's warehousing, storage, tank distribution and US terminal delivery capabilities.
Investment advice: 1) Profit forecast: Considering demand pressure, we adjusted the net profit due to mother for 2024-2025 to be 590 million yuan and 700 million yuan, respectively (the original forecast was 7.3 million yuan and 940 million yuan), and introduced a profit forecast of 8.3 million yuan for 2026, corresponding to EPS of 3.59/4.23/5.06 yuan, corresponding to PE 16/13/11 times PE. 2) Investment advice: We are optimistic that the company will be given 20 times PE in 2024, corresponding to a one-year target market value of 11.8 billion yuan, corresponding to a target price of 71.8 yuan. We are optimistic that the company, as a representative of a comprehensive logistics service provider for hazardous chemicals, has room for long-term development, and maintains a “recommended” rating.
Risk warning: demand for chemicals falls short of expectations, company business development falls short of expectations, safety management risks, etc.