Revenue increased slightly year over year, and profits were under pressure. In 2023, the company achieved revenue of 25.89 billion yuan, +0.3% year over year, net profit attributable to mother of 2.22 billion yuan, adjusted net profit of -37.8%, net profit without return to mother of 1.96 billion yuan, adjusted -10.7%, EPS was 1.33 yuan/share, and plans to distribute 10 yuan 5.6 (tax included), of which glass fiber and products/blades/lithium film were 83.8/947/2.44 billion yuan, contributing -8.3%/-0.75%/+30.6% to mother net profit; Q4 Revenue for a single quarter was 7.66 billion yuan, -4.3% year on year, net profit to mother of 520 million yuan, or -54.3% year on year; net profit without return to mother was 4.7 billion yuan, -16.4% year on year.
Structural upgrades are superimposed, integrated and optimized, and wind power blade profit repair. In 2023, sales of wind power blades were 21.6 GW, +5.0% YoY, 5.6MW/set of power, +23% YoY, achieved revenue of 9.47 billion yuan, -0.75% YoY, gross profit margin 18.3%, +9.7pct year on year, contributing net profit of 590 million yuan. The estimated MW price/cost/gross profit was 43.8/35.8/8.0 million yuan, respectively, -5.2%/-15.4%/+100%, due to the continued recovery of wind power installations and price pressure. The main benefits of increasing profits were increased and decreased. Structural optimization and raw material prices have declined, and the efficiency of complex collaborative optimization has improved in mergers and acquisitions.
Glass fiber sales bucked the trend, and the industry boom is expected to bottom out. In 2023, a total of 1.36 million tons of glass fiber and its products were sold, with a year-on-year sales rate of +17.0%, with a year-on-year sales volume of +37%/+23%/8.4%, achieving revenue of 8.38 billion yuan, -8.3% year-on-year, net profit of 1.02 billion yuan, -64.0%, gross profit margin 22.6%, year-on-year -9.8pct. Facing the continued downturn in the industry, prices continued to decline, actively adjust the product structure, benefiting from advantageous production capacity such as wind power and thermoplastics, and production and sales continued to record high sales. The rate remains relatively high level, and to some extent hedge against the pressure brought about by falling prices. At present, the industry is clearly bottoming out, the pace of release of new production capacity has slowed down, and the industry boom is expected to gradually recover.
The profit of lithium film is stable, and the project layout is progressing at an accelerated pace. In 2023, sales of lithium battery diaphragms were 1.73 billion square meters, +52.9% year over year, of which sales volume of coated products increased by 12 pcts, achieving revenue of 2.44 billion yuan, +30.6% year over year, net profit of 740 million yuan, net profit +54.4% year over year, average price/cost/net profit per measurement unit was 1.41/0.86/0.43 yuan/square meter, -14.6%/-12.3%/flat. Faced with downward price pressure, the company's overall profit remained stable through product structure improvements, yield and capacity utilization. The base film production capacity utilization rate reached 107% during the reporting period. The production line A yield remained stable at over 90% throughout the year, and the base film unit cost decreased by 24% year on year. As of 2023, the company has a base film production capacity of 4 billion square meters. The construction of each base is progressing according to the plan, and production capacity is expected to exceed 6 billion square meters by mid-2024.
Risk warning: Glass fiber production capacity investment exceeds expectations; wind power installation falls short of expectations; raw fuel prices have risen sharply; investment suggestions: optimize the structure to improve profits, be optimistic about diversified layouts to provide growth momentum, maintain the “buying” company as a core enterprise in the new materials business sector of China, and continue to focus on the direction of new materials and new energy sources. Currently, the trend of glass fiber bottoming has gradually become clear. Profits have been repaired, and lithium film has accelerated production expansion to release elasticity, and is optimistic that diversified businesses will bring growth momentum. Considering that the price of glass fiber is still low, competition for lithium leaf films is fierce, the 24-25 profit forecast was lowered. EPS is expected to be 1.38/1.71/2.10 yuan/share for 24-26, respectively, and the corresponding PE is 11.2/9.0/7.3x, maintaining the “buy” rating.