Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 2,801 billion yuan, +31.63% year-on-year; net profit to mother was 22.64 million yuan, +114.24% year-on-year. In 2024Q1, the company achieved revenue of 528 million yuan, +4.13% year-on-year; net profit to mother was 7.87 million yuan, -77.10% year-on-year.
Revenue is growing steadily, and distribution channels are being developed steadily. On a quarterly basis, 2023Q1-4's revenue growth rate was +55.72%/+34.32%/+26.39%/+21.15%, respectively, while 2024Q1's revenue increased 4.13% year over year, and revenue maintained steady growth. The company is vigorously expanding its channel business. Through a network of dealers distributed all over the country, the company sells products to terminal construction and other types of customers. On the product side, the company produced the excellent performance of polymer materials based on imported production lines, and developed “CSPV” and integrated steel-plastic composite panel systems for industrial and commercial photovoltaic roof use scenarios.
Raw material costs have declined, and gross margins have improved, and depreciation has dragged down profits. The company's gross profit margin in 2023 was 22%, +2.51pct year on year; 2024Q1 gross profit margin was 21.71%, -0.97pct year on year. By product, the gross profit margin of waterproof membrane in 2023 was 23.54%, a year-on-year change of +3.17pct; the gross profit margin of waterproof coatings was 28.37%, with a year-on-year change of +8.94 pct, mainly due to an improvement in the company's profitability due to declining raw material costs. In terms of the period expense ratio, the company's sales/management/R&D/finance expense ratios in 2023 were -0.64/-2.42/-0.32/+0.22pct, respectively. Among them, the decline in management expenses was mainly due to a reduction in share payment expenses for the current period; in 2023, the company calculated bad debt provisions and impairment preparations for various assets totaling 163 million yuan, which were transferred or recovered 16 million yuan per year.
Operating cash flow increased substantially in 2023. The net cash flow from the company's operating activities in 2023 was 192 million yuan, an increase of 315% over the previous year, mainly due to an increase in cash received from the sale of goods and provision of services. 1) Payout ratio: 2023 company revenue ratio 101.08%, year-on-year change -4.14pct; 2) Pay-as-you-go ratio: 2023 company payout ratio 101.86%, year-on-year change +3.50pct.
The net cash flow from 2024Q1's operating activities was -261 million yuan, -1,698.76% year-on-year, mainly due to a decrease in cash received from sales and an increase in cash payments for raw material purchases due to an increase in housing debt.
Profit forecasting and investment rating: The company competes for polymer waterproof membranes and continuously increases R&D investment to improve technical strength. As waterproof standards are raised, polymer waterproof membranes continue to penetrate, and there is a lot of room for improvement in product demand. Considering the slow recovery in downstream demand, we lowered the company's net profit forecast value for 2024-2025 to 0.76 billion yuan (previous value was 1.84 billion yuan), and the net profit forecast value for the new company in 2026 was 198 million yuan. The corresponding PE was 42X/23X/16X, respectively, maintaining the “increase in holdings” rating.
Risk warning: risk of fluctuations in the real estate industry; risk of sharp fluctuations in raw material prices; increased risk of industry competition; risk of accounts receivable; risk of equity pledges.