Core views:
Asia Star Anchor Chain disclosed its annual report for '23 and its quarterly report for '24. Revenue in 2023 was 1,931 million yuan, up 27.34% year on year; net profit to mother was 237 million yuan, up 58.71% year on year. Net profit after deducting non-return to mother was 202 million yuan, an increase of 49.89% over the previous year. Among them, 23Q4's revenue was 441 million yuan, down 1.32% year on year; net profit to mother was 60.75 million yuan, up 15.20% year on year.
Revenue for the first quarter of 2024 was 449 million yuan, a year-on-year decrease of 8.14%; net profit to mother was 67.98 million yuan, an increase of 15.3% year-on-year.
The shipbuilding cycle is on the rise, and marine chain sales are increasing. The company sold 133,000 tons of marine anchor chains in 2023, up 23.62% year on year; received new orders of 151,600 tons, up 28% year on year; marine chain revenue was 1,352 billion yuan, up 23% year on year; gross profit margin was 25.5%, up 3.19 pct year on year. We believe this mainly benefited from lower raw material prices.
Increased sales were compounded by higher unit prices, and mooring chain revenue increased dramatically. The company sold 32,100 tons of mooring chains in '23, a year-on-year increase of 18.63%. Mooring chain revenue was 559 million yuan, up 41% year on year, unit price increased significantly; gross profit margin was 41.59%, up 7.46 pct year on year. According to the annual report for the year 23, the freight rate of marine mooring chains decreased significantly year-on-year, mainly due to the decrease in the unit price of sea freight and the increase in the share of mooring chain sales, which is lower than that of foreign countries.
The world's largest chain manufacturer has benefited from the rising boom in their main business. According to the 23rd annual report, the company is currently the world's largest chain manufacturer. In 2023, the company's production capacity is 350,000 tons, including 160,000 tons of marine anchor chains, 110,000 tons of offshore oil platform mooring chains, 30,000 tons of high-strength mining chains, and 50,000 tons of anchor and marine steel castings.
Profit forecast and investment advice: The company's net profit to mother for 2024-2026 is estimated to be 295/3.44/ 403 million yuan, respectively. Considering the company's position in the industry, we gave the company a 24-year PE valuation of 40 times the net profit to mother, corresponding to a reasonable value of 12.32 yuan/share, maintaining a “buy” rating.
Risk warning: risk of industry cycle fluctuations; risk of rising raw material prices; risk of exchange rate fluctuations.