In 2023, the company's revenue was 3.4 billion yuan, up 6.15%; net profit to mother was 144 million yuan, down 29.21%; bar sales revenue was 211 million yuan, down 0.94%; net profit was 487.539 million yuan, which changed from profit to loss.
The company optimized its product structure, and sales of multiple products grew strongly. In 2023, the company's tungsten concentrate (65%) output was 4,154 tons, up 5.64% year on year, and tin metal production was 882 tons, up 6.23% year on year. In terms of product sales, sales of tungsten powder were 4,175 tons, up 3.31%; sales of tungsten carbide powder were 4,913 tons, up 2.28% year on year; sales of thermal spray powder were 442 tons, up 18.50% year on year; hard alloy sales volume of the company headquarters was 1104 tons, up 10.28% year on year; sales of Acta blades were 204.11,000 pieces, up 27.66% year on year, mainly due to the company's increased market development efforts; hard alloy (bar) sales volume was 688.82 tons, up 6.71% year on year. The company gave full play to the advantages of the entire industry chain to achieve continuous growth in sales of multiple products.
Revenue increased year over year, and gross margin declined slightly. Revenue of 3.4 billion yuan was achieved in 2023, an increase of 6.15% over the same period.
Among them, tungsten powder was 1.02 billion yuan, an increase of 5.68%; tungsten carbide powder was 1,145 million yuan, an increase of 3.92%; and hard alloy was 834 million yuan, an increase of 11.08%. Mainly because the company sold discounted sales in order to have a competitive advantage, sales volume and operating income increased by a certain margin, and Oktec blades grew rapidly. In 2023, the company's gross profit margin was 15.03%, down 0.54 pct, mainly due to an increase in raw material prices and a decline in the gross margin of individual products.
Expense rates increased during the period, and net profit to mother declined. The company's expense ratio for 2023 was 9.71%, an increase of 0.66pct over the same period. Among them, the sales expense ratio was 2.02%, an increase of 0.67 pct, mainly due to increased market development efforts; the management expense ratio was 4.22%, a decrease of 0.06 pct; the financial expense ratio was 1.94%, a decrease of 0.04 pct; and the R&D expense ratio was 1.54%, an increase of 0.09 pct. Net profit attributable to mother in 2023 was 144 million yuan, down 29.21% from the same period, mainly due to bar losses during the reporting period. Net profit of bars - 487.539 million yuan, mainly due to increased sales expenses due to further market development and loss due to inventory price decline, which changed from profit last year to loss.
Operating cash inflows have declined, and debt ratios have declined. The company's revenue ratio in 2023 was 0.9856, an increase of 14.72%; the pay-to-cash ratio was 0.9342, an increase of 18.66%. Taken together, the net operating cash inflow was 187 million yuan, a year-on-year decrease of 0.23 million yuan; the net outflow from investment activities was 78 million yuan, a year-on-year decrease of 124 million yuan, mainly due to the decline in foreign investment. The company's balance ratio in 2023 was 58.10%, a year-on-year decrease of 0.05pct. On the mining side, the Dayu Shilei tungsten mine underground renovation and expansion project has completed project research, plan design, and safety review. The Dayu Shilei tungsten mine tailings storage project is being implemented. The infrastructure for dam 1 has already been completed, and future production increases can be expected.
Investment advice: The company is an enterprise in the entire tungsten industry chain. It produces high levels of tungsten concentrate on its own, and has plans to expand production. The tungsten price center may continue to move upward in the future, and I am optimistic that performance will continue to grow. Considering the company's bar losses, the company's net profit due to mother in 2024-2026 is estimated to be 2.70, 3.27, and 373 million yuan, corresponding to PE of 29.5, 24.4, and 21.4 times, respectively, maintaining a “highly recommended” rating.
Risk warning: the risk of tungsten price fluctuations, the company's project progress falls short of expectations, and downstream demand falls short of expectations.