Incidents:
On April 22, 2024, the company released its 2023 annual report and its report for the first quarter of 2024. In 2023, the company achieved revenue of 1,141 billion yuan, a year-on-year decrease of 17.75%, realized net profit of 167 million yuan, a year-on-year decrease of 35.79%, and realized net profit without return to mother of 145 million yuan, a year-on-year decrease of 39.19%.
The fourth quarter of 2023 achieved operating income of 368 million yuan, an increase of 51.8% year on year, and net profit to mother of 12 million yuan, a year-on-year decrease of 73.6%. In 2023, the company's gross margin was 30.3%, -1.4pct year on year, net margin was 14.6%, and -4.1pct year on year. The first quarter of 2024 achieved revenue of 302 million yuan, a year-on-year increase of 31.02%, and realized net profit of 0.28 million yuan, a year-on-year decrease of 49.84%, and realized deduction of non-net profit of 23 million yuan.
Comment:
Wind power coatings are highly competitive and have good profitability. In 2023, the company achieved revenue of 1.14 billion yuan, including 51 billion yuan for wind power coatings. The share of wind power paint business revenue increased from 28.89% in 2022 to 44.73% in 2023. The installed capacity of the wind power industry increased significantly in 2023 compared to 2022, and wind power paint revenue increased 27.34% year over year. At the same time, thanks to the relatively concentrated competitive pattern and the decline in raw material prices, gross margin was at a high level, maintaining a high level of 46.35% in 2023.
Demand for containers is recovering, and wind power installations continue to grow. In the container sector, the company clearly benefited from the recovery in industry demand in the fourth quarter of 2023, but the price recovery of related products lagged behind, causing poor gross margin performance to a certain extent. In the field of wind power, according to the “2023 China Wind Power Hoisting Capacity Statistical Brief” issued by CWEA, in 2023, the country added 14,187 new installed machines, with a capacity of 79.37 MW, an increase of 59.3% over the previous year. The wind power industry is still in a period of rapid development.
It continues to cultivate technological innovation and product quality, and has a first-mover advantage in the field of environmental protection. Driven by the “double carbon” goal, accelerating the development of environmentally friendly products such as water-based coatings has become an important industry trend. The company has been vigorously researching and developing environmentally friendly coatings since 2010, and launched environmentally friendly water-based wind turbine blade coating products in 2016. Currently, it is in a leading position in the field of wind power blade coatings in China, and is the single champion in the domestic wind power coating field. The company's wind turbine blade coating products were successfully applied to the 126-meter wind turbine blades of Shuangrui Wind Power, and the company's products were also successfully applied to Huaneng Group's world's first 2.7 MW double turbine wind turbine. In the container sector, the company's water-based paint continues to gain market recognition, and its market share continues to increase, and it has become one of the top four container paint suppliers in the world.
Profit forecast and investment rating: Container production is recovering, and the wind power industry continues to grow. We expect net profit to be $270 million and $340 million respectively in '24 and '25. The closing market value as of April 23 was 14.8 and 11.6 times PE for 24 and 25, maintaining the “gain” rating.
Risk factors: the risk that the container and wind power industry will fall short of expectations, the risk of fluctuating raw material prices, and the risk of increased industry competition.