Core views:
The company announced its 23-year results: in '23, the company achieved revenue of 3,907 billion yuan, an increase of 7.67% over the previous year; net profit to mother was 558 million yuan, an increase of 14.21% over the previous year.
In the context of downstream brands leaving the inventory, the company's performance grew steadily. (1) By product, the revenue growth rate of buttons and zippers was similar in '23. Button revenue was 1.60 billion yuan (YoY +9.0%), zipper revenue was 2.14 billion yuan (YoY +6.8%), and other apparel accessories revenue was 1.16 billion yuan (YoY +8.8%).
(2) By region, the sales growth rate in the international market is better than that of the domestic market. Domestic market revenue in 2012 was 2.70 billion yuan (YoY +7.2%), and international market revenue was 1.21 billion yuan (YoY +8.8%).
The company's performance has been growing steadily. We believe that on the one hand, downstream domestic and foreign brands are getting better inventory, and customer orders are picking up; on the other hand, the company has significant advantages such as quick turnaround and delivery, and continues to increase its market share while bucking the trend. At the same time, the expansion of new categories is showing initial results and contributing to the increase in revenue. Furthermore, we expect the company's Vietnam Industrial Park to be put into operation in early '24, which is expected to contribute to some increase in performance. The company's revenue target for 24 years is positive, at 4.5 billion yuan, showing the company's confidence.
In '23, the company's net profit margin improved, zipper gross margin increased, and rates were under pressure. In '23, the company's net profit margin increased by 0.8 pct to 14.3% year on year. The main reason was that the gross margin of the zipper business improved by 3.0 pct due to improvements in the customer structure, etc., and the company's financial expense ratio increased 1.0 pct as a result of changes in international exchange rates. At the same time, the company's sales expenses ratio increased by 0.5 pct due to an increase in the company's employee remuneration expenses, etc., and the management expense ratio remained generally stable.
The dividends exceeded expectations. In 2023, the proposed cash dividend was 530 million yuan, accounting for 94% of net profit attributable to mother, corresponding to a dividend rate of 3.8%; at the same time, the company formulated a mid-2024 cash dividend plan.
Profit forecasting and investment advice. The company's EPS is expected to be 0.54/0.62/0.70 yuan/share in 24-26, respectively. Referring to comparable companies, the 24-year PE valuation is 22 times, corresponding to a reasonable value of 11.97 yuan/share, and a “buy” rating.
Risk warning. The risk of a macroeconomic downturn, the risk of rising raw material prices, the risk of rising labor costs, and the risk of overseas production capacity expansion falling short of expectations.