Key points of investment
The company released its 2023 annual report, achieving full year revenue/net profit of 3.91 billion yuan/550 million, YOY +7.7%/14.2%, annual dividend payment rate of 94%, and optimistic 24-year growth guidelines.
The international strategy continues to advance, and the target growth rate of the 24-year business target is accelerating month-on-month. Looking at the full year of 2023, the company's overseas production capacity is strong, production and sales are strong.
1) The utilization rate of overseas production capacity increased markedly: the company's annual capacity utilization rate increased by 3.5 pp, from 63.3% to 66.8%, with production capacity in China/Bangladesh accounting for 85% /15% respectively, and the capacity utilization rate of the two places was 69.5%/50.6% respectively; in 2022, the capacity utilization rate of the two regions was 66.5%/39.7%, respectively, and the overseas capacity utilization rate increased significantly compared to the previous year. At the same time, the company also continues to advance the construction of the first phase of the Vietnam Industrial Park, which will further strengthen the “global supply” industrial chain synergy advantages. By the end of 2023, the final investment progress of the company's early fund-raising investment in Vietnam's apparel accessories project was 59.5%.
2) Overseas sales continued to grow: domestic/overseas business revenue increased +7.2%/+8.7% year-on-year throughout the year, and the share of direct export business increased 0.3 pp to 31.0%.
Revenue is expected to increase 15% in 2014, up from the previous quarter in 2023. The company proposed an operating growth target for the next year in 2024. In 2024, the company plans to achieve revenue of 4.50 billion yuan, control total operating costs of around 3,830 billion yuan, YOY +15.2%/+16.4%. The revenue side growth target is significantly accelerated from the previous year. With the gradual release of the company's overseas production capacity, we believe that the company is expected to continue to achieve steady growth based on its strong competitiveness.
The dividend ratio continues to rise, and the revenue growth rate is improving quarter by quarter
In 2023, the company plans to pay a cash dividend of 530 million yuan for the full year, net profit of 560 million yuan, and a dividend payment ratio of 94.3%, which is a significant increase from 74.3% in the same period last year. Since its listing in 2004, the company has accumulated dividends 19 times. The dividend payment rates for the past three years were 94.3%/78.3%/88.9%, respectively, and continued to share the company's growth dividends with shareholders.
1) Looking at the pace of the whole year, revenue and net profit to mother were achieved at 3.91 billion yuan/550 million, YOY +7.7%/14.2%; on a quarterly basis, Q1-4 revenue growth rates were -3.6%/+2.4%/+8.7%/+23.8%, and Q1-4 net profit to mother grew at a year-on-year rate of -17.7%/+0.6%/+10.6%/reverse loss, and revenue and profit showed a clear quarterly improvement trend.
2) By business, the company's annual zipper/button business revenue increased +6.8%/+9.0% year on year to 2.14 billion/1.6 billion, and sales volume increased 5.7%/4.6% year on year to 50 million meters/8.91 billion grains, with gross margins of 41.0%/42.2%, respectively.
? Profit forecasting and valuation: As one of the largest and most comprehensive apparel accessories companies in the world, the company has been in the field of accessories production for more than 30 years and has actively sought change over the past ten years. The results have entered a period of release dividends, and it already has the ability to challenge YKK upward. We expect revenue to increase 15%/16%/16% to 45.0/52.0/6.04 billion yuan in 24/25/26, respectively, and net profit to mother of 6.4/7.5/870 million yuan, up 15%/16%/17% year over year. The current market value corresponds to PE of 22X/19X/16X. The company has a clear competitive advantage in the field of accessories production. We continue to recommend and maintain the “buy” rating.
Risk warning: risk of raw material price fluctuations; production safety risk;