The company released its 2023 annual report. Annual revenue of 3.142 billion yuan, +15.67% year over year, net profit to mother was 121 million yuan, which significantly reversed losses year on year (previous year - 165 million yuan), after deducting non-net profit of 73 million yuan (previous year - 180 million yuan); single Q4 revenue was 913 million yuan, +19.24% year over year, net profit to mother was 46 million yuan, compared to -184 million yuan in the same period last year.

Ceramic tiles and automotive interior finishing materials contribute to revenue growth. By business, the revenue of tiles/fireproof boards/polymer composites in '23 was 15.7/2.6/1.22 billion yuan, +20%/+10%/+10% compared to the same period last year.

After Tianan entered the market, Yingpai's market-based system reform gradually paid off. By the end of 23, it had 1,373 dealers (+68) and 1,397 stores (+168); automotive interior finishing materials had revenue of 480 million yuan in 23 years, +15% over the same period, and +18% CAGR in 20-23. In the future, it will continue to seize the market opportunities for rapid development of new energy vehicles.

Gross margin has increased, and the drag on depreciation has decreased. The comprehensive gross profit margin for 23 years was 22.43%, +1.75pct year on year, with a gross profit margin of 23.8%/30.5%/28.0% for tiles/fireproof panels/automotive interior finishing materials, +0.7/+5.9/+2.2pct; the cost ratio for the 23-year period was 18.09%, -1.19pct year on year, with sales and financial expense ratios -0.76/-0.33 pct respectively, and the scale of interest-bearing debt continued to decline; credit impairment and asset impairment were -0.02/-10 billion yuan, respectively, in the same period last year /- 90 billion yuan, the impact on profit was drastically reduced; above the composite, the net interest rate for 23 years was 4.9%, +12.4 pct.

Increased turnover and steady cash flow. In 23, the receivables turnover ratio was 5.1 times, +1.3 times year over year, inventory turnover rate 5.0 times, +0.6 times year over year; net operating cash flow was 191 million yuan, net present ratio of 1.58 million yuan, of which Eagle Pai/Ruixin net cash flow was 1.93/042 million yuan, all of which continued to improve.

Profit forecasting and investment advice. We expect EPS to be 0.75, 0.93, and 1.15 yuan/share in 24-26, respectively. According to the latest closing price, PE is 13.31, 10.77, and 8.71 times, respectively. Maintaining the 24-year 15x PE judgment, corresponding to a reasonable value of 11.32 yuan/share, maintaining the “buy” rating.

Risk warning. Channel construction and expansion fell short of expectations, fluctuations in raw fuel prices exceeded expectations, and customer expansion of automotive interior finishing materials fell short of expectations.