New product sales drive 24Q1 revenue/profit to continue to rise month-on-month
Covex Co., Ltd. released its annual report. In 2023, it achieved revenue of 2,400 million yuan/yoy +35.99%, with net profit of 734 million yuan/yoy +89.02%, of which Q4 revenue was 626 million yuan/yoy +21.27%, qoq 7.10%; net profit to mother was 197 million yuan/yoy +47.33%, qoq +6.29%. 24Q1 revenue is 712 million/yoy 21%, qoq 13.8%; net profit to mother is 220 million/yoy 37%, qoq 11.36%. We expect that due mainly to the rapid growth in sales of new products such as PS/EHT/PA, the price drop for old products is limited/sales are relatively stable. The estimated 2024-2026 EPS is 5.63/6.93/8.25 yuan. Comparatively, the company Wind unanimously expected the average PE value to be 23 times. Considering the reduction in market risk appetite and style changes since 23H2, the company was given 18 times PE in 24 years, with a target price of 101.34 yuan (maintenance) to maintain a “buy” rating.
Profit margins remain at a high level
23Q3/23Q4/24Q1 gross profit margin 50.10%/46.64%/47.82%, net profit margin 31.79%/31.55%/30.85%. Looking at volume and price trends, we expect that among traditional sunscreens, AVB is in strong demand and price; OS/HMS and other varieties will drop by less than 5%; OCT prices will fall relatively fast, and profits will account for a limited share. Among the new sunscreen agents: PS/EHT/PA/PM prices are strong, maintaining a rapid growth trend in shipments.
Expense rates are relatively stable, and the scale of fixed assets is rising
The cost ratio for the 23-year period was 12.28%, with a sales expense ratio of 1.37%, a management expense ratio of 6.81%, an R&D expense ratio of 4.72%, and a financial expense ratio of -0.61%, which remained relatively stable. By the end of '23, the company's fixed assets were $926 million, an increase of 254 million over the beginning of the year; 24Q1 fixed assets were further raised to $1,236 million, mainly due to the transformation of some projects under construction.
Abundant stocks of new products
Physical sunscreen titanium dioxide: laboratory research stage, developed and continuously enriched other models; physical sunscreen zinc oxide: laboratory research stage, development of safe, environmentally friendly and relatively economical process routes; Carbomer: laboratory research stage, developed, rich product line; high-end emollient:
The main process routes have been completed, and some aspects are being optimized; hair conditioner: laboratory research stage, developing a safe, environmentally friendly and relatively economical process route; high-efficiency moisturizer: the main process route has been completed, and some aspects are being optimized; high-end synthetic fragrance/formulation application and compound development for sunscreen, cleaning, moisturizing, etc.: laboratory research stage. The new products are expected to contribute more new growth points to the company in the future.
Risk warning: Macro factors such as exchange rate/oil price/shipping fluctuate greatly; demand weakens; prices fall.