23Q4 revenue/net profit to mother was -14.1%/-96.2%, maintaining that the company achieved revenue/net profit after “purchase” of 26.1/30/2.8 billion yuan, -13.6%/-63.8%/-53.7% (after adjustment), net profit without return to mother was close to the median performance forecast value ($290 million); of these, 23Q4 revenue/net profit attributable to mother was 6.2/0.08/0.2 billion yuan, -14.1%/-96.2%/-81.81.3% YoY. Considering that the price of glass fiber is still at the bottom, we expect the company's net profit to be 2.1/2.7/430 million yuan in 24-26. Comparatively, the company Wind's consistent expected average value corresponds to 19xPE in 24. Considering that the company's products account for relatively high profitability or strength, we approve giving the company 23 x PE for 24 years, with a target price of 11.73 yuan, maintaining a “buy” rating.
The gross margin of glass fiber and products continued to decline. Part of the product structural advantage hedged the price pressure of the industry to sell 27.4/7.9/0.7 million tons of glass fiber and products/chemical/FRP products in 23 years, -1.3%/-9.7%; revenue of 19.1/6.4 billion yuan, -15.0%/-15.1% year-on-year; gross margin of 27.7%/15.2%/22.7%, year-on-year - 11.5/-0.1/+1.0pct. The main price decline in glass fiber and product gross margin continued Decline. We estimate that the unit price of the company's glass fiber and products in '23 was 6,973 yuan/ton, -14.7% year-on-year. The decline was lower than the price drop for thick yarn in the industry, and the product structure advantages were outstanding.
The cost ratio for the period increased slightly, and the net operating cash flow significantly improved the company's expense ratio for the 23-year period by 11.5%, +1.8pct. Among them, the sales/management/R&D/finance expense ratios were 2.6%/4.5%/5.1%/-0.7%, respectively, +0.5/+1.0/+0.7/-0.4 pct. The decrease in the financial expense ratio was mainly due to an increase in interest income. The net interest rate of the company withheld from mother in '23 was 10.8%, -9.3pct year on year; 23Q4 was 2.5%, -9.0/ -8.0 pct month-on-month, showing a quarterly downward trend throughout the year due to the decline in glass fiber prices. At the end of 23, the company's balance ratio/interest-bearing debt ratio was 29.4%/17.1%, respectively, +5.6/+5.5pct year-on-year, mainly due to a marked increase in long-term loans. The company's net operating cash flow in '23 was 720 million yuan, +28.1% year on year, and Q4 net operating cash flow was 200 million yuan, +36.5% year over year, mainly due to an increase in time deposit recovery and a decrease in various taxes paid.
The glass fiber industry has begun a full price recovery, and the company's Q2 profitability is expected to recover month-on-month. According to Zhuochuang information, the average price of 24Q1 glass fiber wound direct yarn/SMC bonded yarn/G75 e-yarn was -26%/-18%, and -6%/-1%/-7% month-on-month, respectively, but at the end of March, glass fiber companies began full price recovery, and industry prices bottomed out. It is expected that Q2's profitability will recover month-on-month. According to the company's annual report, as a leader in the glass fiber short-cut felt segment, the company already accounts for more than 50% of the domestic car roof felt market. The high-end product structure is expected to enhance the company's profitability. At the same time, the company's 600,000-ton intelligent manufacturing base and 80,000-ton technical improvement and expansion project are progressing in an orderly manner, and the company's production capacity and production efficiency are expected to increase further after completion.
Risk warning: risk of price fluctuations of raw materials, risk of technological upgrading, risk of further deterioration of supply and demand.