Incident: The company released its 2023 annual report and 2024 quarterly report, with 2023 revenue of 2.4 billion yuan, yoy +36%; net profit attributable to mother of 734 million yuan, yoy +89%; net profit after deducting non-return to mother of 715 million yuan, yoy +89.1%. Among them, 23Q4 revenue was 630 million yuan, yoy +21.3%; net profit to mother was 200 million yuan, yoy +47.3%.
24Q1 revenue was 710 million yuan, yoy +21.1%; net profit to mother was 220 million yuan, yoy +37.2%.
On the revenue side, by business, the 2023 revenue of active cosmetic ingredients and their raw materials/synthetic fragrances was 2.07/310 million, yoy +43.7%/6.8%, respectively.
On the cost side, gross margin was 48.8% in 2023, an increase of 12.2pct. High profitability continues, demand for sunscreen products continues to grow, and the company's market position steadily increases, and the company's overall production capacity utilization rate has increased and the rapid release of production capacity for new products represented by new sunscreen agents has enabled revenue and gross profit growth.
Financial highlights:
① It has continuous innovation and R&D capabilities to enable the company's future development. The company closely follows industry development and cutting-edge technology. In addition to continuously optimizing and upgrading mass-produced products, the company has also implemented a number of new product development projects and has multi-level technical reserves for continuous iteration. As of the 2023 annual report, the company and its subsidiaries have 172 authorized patents, including 46 invention patents.
② Rich product structure. In addition to traditional sunscreen products that are widely used, the company has deployed new chemical sunscreen products such as P-S, P-M, EHT, and PA and physical sunscreen products such as titanium dioxide with strong R&D capabilities, and has also expanded cosmetic ingredients such as amino acid surfactants and PO.
Investment suggestions: As a leading manufacturer of sunscreen ingredients in the world, ① the company is optimistic about the steady increase in the company's competitive landscape; ② increasing the capacity utilization rate of new sunscreen products and rapidly advancing the construction of high-end personal care products and synthetic fragrance projects, increasing the proportion of high-profitability products, and expanding the category. At the same time, it is expected to show more possibilities based on the high stickiness of current customers. Considering that the release of the company's new product production capacity is expected to drive a continuous increase in profitability and the profit forecast was raised, it is estimated that net profit from 24-25 million yuan will increase from 88/1.09 billion to 93/1.17 billion, corresponding to PE14/12X, maintaining a “buy” rating.
Risk warning: risk of macroeconomic fluctuations, risk of falling short of expectations, risk of increased market competition, industry policy risk