The company's business situation in 2023: In 2023, the company achieved main business revenue of 23.768 billion yuan, an increase of 5.09% over the previous year, and realized a net profit of 2,801 billion yuan to mother, an increase of 45.51% over the previous year.
The core business is growing steadily to promote high-end products and product portfolio optimization. By product, thanks to the omni-channel sales strategy and continuous improvement of the brand image, the company's three core business segments (tissue, sanitary napkins and diapers business) achieved steady revenue growth for the full year of 2023, with an annual increase of about 8.0%. Among them, sales revenue from the tissue business was 13.748 billion yuan, up 12.25% year on year, and achieved revenue of 6.578 billion yuan, up 2.70% year on year; despite facing fierce market competition, the company still adhered to a stable price strategy and focused on profit, and sales continued to increase. The sanitary napkin business had sales revenue of 6.178 billion yuan in 2023, an increase of 0.36% year on year, and achieved revenue of 2,959 billion yuan in the second half of 2023; the diaper business achieved revenue of 12.54 billion yuan in 2023 100 million yuan, up 4.33% year on year. Sales revenue for the second half of 2023 was 589 million yuan, up 3.70% year on year. The company is committed to developing high-end products and optimizing the product portfolio to meet the needs of domestic consumers for diversified products. In 2023, the company's key upgrades and sales of high-end products achieved a year-on-year increase of more than 10.0%. Among them, the sanitary napkin series “pant” series products increased by more than 73.4% year on year. The “cute pajamas” and “seven-degree space” upgraded products launched by the company, as well as the upgraded tissue series “Cloud Touch Skin” products are loved by consumers. We believe that high-end product initiatives will help the company maintain strong sales momentum and enhance product strength. Sales of various key and high-end products will also maintain a high year-on-year growth rate, driving overall profits to maintain a relatively rapid growth rate.
Vigorously develop e-commerce business and actively expand new retail channels. In order to meet the increasing needs of consumers, the company continues to innovate, develop and optimize e-commerce and other new retail channels, and strengthen penetration into other emerging channels (such as Douyin). The price stability strategy adopted has received positive feedback from the market, further enhancing the company's brand awareness online and other new retail channels. Throughout 2023, the Group's e-commerce and new retail channels maintained a strong development momentum, with sales revenue exceeding 7.16 billion yuan, accounting for a further increase of about 30.1% of total revenue, with an annual increase of about 17.7%. The company continues to expand the share of e-commerce and new retail channels in total sales to seize the opportunities brought by the upgrading of domestic consumption.
Profit forecast and rating: We expect the company's net profit for 2024-2026 to be 2,945, 31.03 billion yuan, and 3.03 billion yuan, respectively, up 5.2%, 5.4%, and 3.2% year-on-year. The current closing price corresponds to 2024-2025 PE 9.7 and 9.3 times. As a leading enterprise in the field of personal cleaning and care, the company is rated 13-14 times PE in 2024, corresponding to a reasonable value range of 32.94 to 35.48 yuan, at the current exchange rate (1 yuan = 1.08 HKD) is calculated at HK$35.58 to HK$38.32, corresponding to 2024 PS of 1.50 to 1.62 times, respectively, giving a “better than the market” rating.
Risk warning: The decline in raw material costs falls short of expectations, market development falls short of expected risks, and market competition continues to increase risks.