occurrences
On April 18, 2024, Real Madrid Technology released its 2023 annual report: in 2023, the company achieved operating income of 1,894 million yuan, down 13.21% year on year; realized net profit of 325 million yuan, down 31.94% year on year; weighted average return on net assets was 12.35%, down 7.38 percentage points year on year. The gross profit margin on sales was 24.62%, up 1.20 percentage points from the previous year; the net profit margin was 17.14%, down 4.72 percentage points from the previous year.
Among them, Q4 2023 achieved revenue of 488 million yuan, +5.81% year over month, -4.05% month on month; realized net profit of 90 million yuan, -8.64% year on year, +6.53% month on month; ROE was 3.31%, down 0.60 percentage points year on year and 0.10 percentage point increase month on month. Gross sales margin was 26.11%, up 3.39 percentage points year on year and 0.31 percentage points month on month; net sales margin was 18.44%, down 2.92 percentage points year on year and up 1.83 percentage points month on month.
reviews
Government subsidies declined somewhat. The company's 2023 performance was under year-on-year pressure. The company achieved operating income of 1,894 billion yuan, a year-on-year decline of 13.21%. Revenue declined. On the one hand, due to the company actively withdrawing from the production of large water reducing agent products in the first half of 2023, and the sales volume of related products declined; on the other hand, as raw material prices declined, the average price of large varieties in 2023 was 6999.61 yuan/ton. The average price for small varieties was 13777.42 yuan/ton. YoY -9.90%. In terms of profit, the company achieved net profit of 325 million yuan in 2023, a year-on-year decrease of 31.94%, mainly due to the high other income that the company received government subsidies due to factory relocation in 2022, while other earnings gradually returned to normal levels in 2023. By sector, in 2023, the company's large variety sector achieved revenue of 58 million yuan, -82.51% year on year, gross margin reached 4.61%, a year-on-year decrease of 4.53 percentage points; small products achieved revenue of 1,834 billion yuan, a year-on-year decrease of 0.87%, and gross margin reached 25.18%, a year-on-year decrease of 0.78 percentage points.
In terms of period expenses, the company's sales/management (including R&D) /finance expenses in 2023 were 0.46%/6.81%/-0.03%, respectively, +0.05/-0.68/+0.94pct compared to the same period, and various expenses were well controlled. In 2023, the net cash flow from the company's operating activities reached 321 million yuan, or -33.32% year-on-year, mainly due to a decrease in sales in the current period.
Deeply involved in the field of small varieties, profitability is expected to gradually increase
The company is a leading domestic specialty surfactant enterprise with a large production scale, comprehensive variety and high technological content. Currently, it has an annual production capacity of nearly 300,000 tons of specialty surfactants. With changes in external supply and demand and the stability of the internal supply chain, the company adjusted its business strategy in due course, focused on high-profit small-variety products, actively developed growth products represented by surfactants for wet electronic chemicals, new energy glue resins, UV light-curing new material resins, etc., and continued to cultivate the field of small varieties in line with the principle of “small varieties create profit”. On the production capacity side, Real Madrid Shangyi achieved part of the production capacity of 30,000 tons in Phase II, and passed the Zhejiang Future Factory certification and acceptance to a high standard; Lukean continued to optimize the production capacity structure, withdrew from the production of a large variety of water reducing agent products, and further promoted project investment and technical implementation; Real Madrid Kaimeike's annual output of 330,000 tons (Phase I) also successfully started construction.
With the continuous optimization of the company's product structure, the company's profitability is expected to gradually grow.
Profit forecasting and valuation
We expect the company's 2024-2026 net profit to be 394/475/577 million yuan, EPS 0.67/0.81/0.98 yuan, respectively, and the corresponding PE price is 14.70/12.20/10.05 times the current price. Real Madrid Technology is the leading domestic market. The company is deeply involved in the field of high-profit small-variety products. As new production capacity continues to be released, it is optimistic about the company's medium- to long-term growth, covering it for the first time, and giving it a “buy” rating.
Risk warning
Risk of fluctuating raw material prices, risk of product demand falling short of expectations, risk of increased industry competition