Net profit from 2024Q1 was +11.4% month-on-month, and the performance continued to be impressive. The company announced that in 2023, it achieved revenue of 2.4 billion yuan/yoy +36%, net profit of 734 million yuan/yoy +89%, after deducting net profit of 715 million yuan/yoy +89%. 2023Q4/2024Q1 achieved revenue of 626/71 million yuan, yoy +21.1%, net profit to mother of 197/220 million yuan, yoy +47%/+37.2%, net profit after deducting non-return to mother of 1.89/204 million yuan, yoy +42.7%/+29.8%, and 2024Q1 revenue/return to mother +13.8%/+11.4% month-on-month.
The dividend payment rate for 2023 was 34.62%, and 10 shares were transferred to all shareholders for every 10 shares by transferring capital reserves to increase share capital. We keep the 2024-2025 profit forecast unchanged and add the 2026 profit forecast. We expect the company's 2024-2026 net profit to be 9.6/12/1.48 billion yuan, yoy +31.1%/+23.4%, EPS is 5.68/7.1/8.76 yuan, and the current stock price corresponding to PE is 14.5/11.6/9.4 times, maintaining a “buy” rating.
High demand for sunscreen + rising production capacity for new products, high business growth+increased profitability by business: In 2023, active cosmetic ingredients and their raw materials/synthetic fragrances achieved revenue of 20.7/310 million yuan, yoy +43.7%/+6.8%, accounting for 86.3%/12.9%; sales volume 195/0.7 million tons, yoy +17.5%/+21.7%, unit price 106/43,000 yuan/ton, yoy +22.3%/-12.2%; gross margin was 53.06%/23.6%, yoy+ 12.95pct/+0.39pct By region: In 2023, overseas/domestic revenue was 2.16/240 million yuan, yoy +37.7%/+22.5%; gross profit margin of 48.8% /yoy+12.17pct in 2023, net profit margin 30.57% /yoy+8.58pct, sales/management/R&D/finance ratio 1.4%/6.8%/4.7%/-0.6%, overall stability. 2024Q1 gross profit margin 47.8% /yoy-1.22pct, net profit margin 30.85% /yoy+3.59pct. The slight decline in Q1 gross margin was due to a 33.8% increase in fixed asset investment, which was revised upward from month to month.
Driven by new product climbing+new production capacity, sunscreen is still in a period of rapid growth. In 2023, the company's cosmetic active ingredients and raw materials have a design capacity of 33,180 tons/year/yoy +22.6%, a capacity utilization rate of 75.05%, and a production capacity of 5,600 tons. The 10,000 ton capacity construction project in Malaysia is expected to be put into operation in 2025, and the company's fund-raising project contributed 280 million yuan in net profit in 2023, accounting for about 38%. The product system is rich: 2023H2 has successfully completed the AVB, PA, EHT, and PS expansion lines, and production capacity will rise further in 2024; PO and amino acid surfactants have already been put into production, and it is expected that after production run-in and new customer certification are completed, Q2 will enter a rapid deployment period. Global sunscreen is still in the rapid penetration stage. The company is effectively expanding production capacity to seize dividends to increase its share and leading position in the industry. There is an urgent need for replacement of anti-dandruff agents, etc., and quantities are imminent.
Risk warning: New production capacity falls short of expectations; high customer concentration; fluctuating raw material prices, etc.