24Q1 revenue/net profit to mother was +0.85% /+0.1 billion yuan. Maintaining the “purchase” rating, the company published the 24Q1 quarterly report: achieved revenue of 1,366 billion yuan (yoy +0.85%, qoq -39.36%) in the first quarter of 2024, net profit to mother of 45.87 million yuan (yoy+10.18 million yuan, qoq - 226 million yuan), deducting non-net profit of 5837.30 million yuan (yoy+1.85 million yuan, qoq - 211 million yuan). We maintain the company's 24-26 revenue forecast at $84/95/10.8 billion. Comparable to Wind, the 24-year average PS was expected to be 2.5x. The company's direct sales exceeded 50,000 small B customers, and the performance was highly sensitive to real estate sales. However, considering the favorable recovery in 23Q4, the 24E PS was given 1.8x, maintained a target price of 47.13 yuan, and maintained a “purchase”.
24Q1 gross margin declined month-on-month. Overall raw material costs fluctuated limited, and the company's comprehensive gross profit margin in the first quarter of '24 was 30.41%, +0.27/ -3.54 pct month-on-month. The gross margin declined month-on-month, mainly due to the impact of the sales cycle. Combined with the price of stainless steel/aluminum alloy, the main raw material, increased slightly from 23Q4. According to Wind, the average quarterly price of 24Q1 asphalt/titanium dioxide/domestic waste/PVC/stainless steel/aluminum alloy was -3.3%/+7%/-7.8%/-8%/+0.7%, -2%/-2%/+2%/+0.2%/+0.2%, month-on-month. Since the second quarter until late April, there are no signs of significant fluctuations in raw material prices, and profitability is expected to remain stable in Q2. In January-January '24, the real estate sales area was -19.4%, compared to the January-January growth rate of +1.1 pct. The retail sales volume of construction and decoration companies above the limit was 38.7 billion yuan, or +2.4% over the same period last year. Demand may be boosted.
The rate during the 24Q1 period was slightly diluted; operating cash expenses increased by 32.22% year-on-year and -0.14pct year-on-year, with sales/management/R&D/finance expenses ratio 19.99%/7.06%/4.78%/0.39%, and -1.18/+0.44/+0.16pct year-on-year. The 24Q1 net interest rate/non-return net interest rate of the company was -3.36%/-4.27%, +3.3/+3.2pct year on year; the company's balance ratio/interest-bearing debt ratio at the end of the first quarter of '24 was 41.2%/5.6%, -8.6/-3.8pct year on year.
24Q1 net operating cash flow of -610 million yuan, year-on-year -251 million yuan, mainly due to a decrease in sales receipts and an increase in operating expenses during the reporting period. 24Q1 payment/cash ratio was 100.68%/130.98%, -17.5/-5.9pct year over year.
Enrich product categories and actively expand overseas sales
The company is committed to building a full-chain sales model of “R&D+manufacturing+service”, improving traditional product systems while laying out markets such as energy efficiency, green buildings, smart homes and security. Targeted development of “Belt and Road” related emerging markets. In recent years, 15 overseas warehouses have been established, and products have been sold to more than 100 countries and regions. At the same time, we are actively developing domestic third- and fourth-tier markets and strengthening channel construction. Currently, we have more than 1,000 domestic and foreign sales outlets.
Risk warning: Policy support falls short of expectations, demand growth in the construction hardware market is slowing down, and raw material prices have risen sharply.