Key investment points
23Q4 results fell short of expectations, and 24Q1 results were in line with expectations. The company's 23 year revenue was 3 billion yuan, up 5%; net profit to the mother was 600 million yuan, the gross profit margin was 44%, and the gross profit margin decreased by 1 pct; of these, 23Q4 revenue was 800 million yuan, +2%/-6% compared to the same period, net profit to mother was -0.9 billion yuan, -169%/-132% year-on-year, mainly due to 100 million yuan+ mediation costs and cost rate increases; 23Q4 gross profit margin 38%, -9 pct/-10 pct compared to the same period last month. 24Q1 revenue of 700 million yuan, +8%/-11% YoY, net profit to mother of 100 million yuan, 41%/-217% YoY, gross profit margin 36%, and -10/-2pct YoY, basically in line with expectations.
Diaphragm shipments were 2.5 billion square meters in '23, and shipments are expected to maintain a growth of nearly 50% in '24. The company's diaphragm revenue in '23 was 3 billion yuan, an increase of 4%, a gross profit margin of 44%, and a decrease of 1 pct, of which overseas revenue was 500 million yuan, accounting for 16%, a decrease of 14 pct, a gross profit margin of 49%, and a decrease of 3 pct. In 23, diaphragm shipments were 2.53 billion square meters, an increase of 48%. Of these, in 23Q4, we expect to ship about 730 million square meters, reducing the environment by about 6%. We expect 24Q1 shipments to be about 65-700 million square meters, and shipments are expected to reach 3.8 billion square meters in 24, maintaining a 50% increase over the previous year.
The average price fell 30% in '23, and the profit for a single flat rate in '24 is expected to drop to less than 0.2 yuan. In '23, the average price of the company was 1.33 yuan/square meter (tax included), down 30%. Of these, we estimated the average price of 1.25 yuan/square meter in 23Q4, and we expect the average price for 24Q1 to be 1.19 yuan/square meter, a drop of about 4%. We estimate that in '23, a single flat deduction of non-net profit was about 0.22 yuan, a decrease of 46%. Of these, 23 Q4 plus depreciation after deducting non-net profit balance. We expect the 24Q1 single flat deduction of non-net profit of 0.15 yuan, an improvement over the previous month. The price of 24Q1 diaphragms is already in the bottom range. We expect a profit of less than 0.2 yuan per flat in 24, and the unit profit is expected to return to 0.2 yuan+/square in 25 as production capacity is cleared and the share of the company's fifth-generation 8-meter production line increases.
The 23Q4 rate increased dramatically, and inventory increased quarterly. Expenses for the 23-year period were 600 million yuan, an increase of 29%, and an increase of 4 pcts, of which the 23Q4 period cost 200 million yuan, +10%/55% compared to the same period, the cost rate 25%, +2/+10pct compared to the same period, and 100 million yuan during the 24q1 period, +22%/-31% compared to the same period, the cost rate 19%, and +2/-6pct compared to the same period. In '23, the company's net operating cash flow was 1.1 billion yuan, a decrease of 13%; in 24Q1, net operating cash flow was 100 million yuan, a decrease of 19%. The inventory at the end of 24Q1 was 500 million, an increase of 67% over the end of 23. At the end of 24Q1, the company was constructing 3.5 billion yuan of projects.
Profit forecast and investment rating: Considering the decline in the price of the company's products, we lowered the company's 2024/2025, and added the 2026 net profit forecast to 6.44/8.55/ 1,244 billion yuan (the original forecast for 2024-2025 was 12.42/1,719 billion yuan), +12%/+33%/+41%, corresponding PE is 24/18/13 times. Considering that the company's profit has bottomed out and there is plenty of room for long-term growth, we maintain the “buy” rating.
Risk warning: Electric vehicle sales fell short of expectations, and profit levels fell short of expectations.