Incident: The company released its 2023 annual report and 2024 quarterly report. In '23, the company achieved revenue of 19.3, +27.3% year over year; net profit to mother was 240 million yuan, +58.7% year over year. 23Q4 revenue was $440 million, -1.3% YoY; Net Profit to Mother was $61 million, +15.2% YoY; 24Q1 revenue was $450 million, -8.1% YoY; Net Profit to Mother was $68 million, +15.3% YoY. 24Q1 revenue declined slightly, and gross margin and net margin continued to rise.
The marine and offshore oil and gas industry picked up in '23, and the marine anchor chain and mooring chain business was booming, boosting the company's revenue growth. In 23, China's shipbuilding completion volume, new orders, and handheld orders accounted for 50.2%, 66.6%, and 55.0% of the world's total volume in terms of DWT, and the market share exceeded 50% for the first time. With the strengthening of international oil prices, the global investment in offshore oil and gas exploration and development in 2023 was about US$186.9 billion, +14% over the same period last year, exceeding the 2019 level. The company is a global anchor chain leader, benefiting from the large shipping cycle and high offshore industry boom, and achieved high performance growth: in 23 years, the company undertook orders of 1.81,000 tons, +12.7% year over year, including 29,000 tons of mooring chains and 152,000 tons of marine chains and accessories; the mooring chain sector achieved revenue of 550 million yuan, +41.0% year-on-year, gross margin +7.5pp to 41.6%, sales 133,000 tons, +23.6% year-on-year; the marine chain and accessories sector achieved revenue of 1.35 billion yuan, +23.0% compared to +3.2pp 25.5 %, achieving sales of 32,000 tons, +1.6% year-on-year.
Product structure optimization, increased gross margin, and changes in combined wealth management investment income and fair value have led to a significant increase in the company's profitability. The overall gross margin for 23 years was 30.6%, +4.6pp. The increase in gross margin was mainly due to fluctuations in the company's raw material prices. The gross margin of the company's mooring chain and marine chain increased by 2.8pp to 29%, and the share of the mooring chain business with high gross margin increased by 2.8pp to 29%; the period fee ratio was 16.6, +3.8pp. Looking at the breakdown, sales, management, R&D, and financial expense ratios were +0.72pp, +0.09pp, +0.43pp, and +2.50pp. The increase in management and financial expenses was due to increased investment and exchange costs for developing the mining chain market Revenue decreased; the expense ratio increased a lot, but changes in the company's financial investment income and fair value increased significantly year on year. The net interest rate was 12.1%, +2.25pp year on year. The 24Q1 comprehensive gross margin was 27.5%, +1.1 pp year on year; the net margin was 15.3%, +2.9 pp year on year, and the cost ratio for the period was 15.1%, +0.6pp year on year.
Asia Star Anchor Chain is a global anchor chain leader, focusing on the three core products of marine anchor chains, mooring chains, and mining chains to continuously enhance competitiveness. Currently, the company's traditional advantage, the marine anchor chain and mooring chain business has benefited from the booming shipbuilding and offshore oil and gas boom, strong production and sales, and continues to be deeply involved in the mining chain and floating wind power mooring chain business, actively expanding categories and opening up the growth ceiling. High-strength mining chains are expected to continue to benefit from domestic substitution. Currently, nearly 80% of China's large-scale high-strength circular ring mining chains rely on imports. The company's high-strength mining chains are mainly used by mainstream domestic coal mining enterprises, and there is huge room for domestic replacement. Offshore wind power mooring chains are expected to build a new level of growth, and floating offshore wind power has broad prospects. The Global Wind Energy Council predicts that the world is expected to add more than 1 GW of floating offshore wind power installed capacity every year by 2026; the cost of mooring chains accounts for 6% of the initial construction cost of the seabreeze platform, accounting for about 5% of the total life cycle cost. The rapid growth of floating offshore wind power in the future will bring a large demand for mooring chains. The company's business is expected to benefit from continued improvement in the ocean landscape and achieve high growth.
Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be 2.9, 380, and 480 million yuan, corresponding EPS of 0.31, 0.39, and 0.50 yuan. The current stock price corresponds to PE of 28, 22, and 17 times, and the compound growth rate of net profit to mother over the next three years is 26%, maintaining a “holding” rating.
Risk warning: risk that the shipping and offshore industry boom falls short of expectations, offshore floating wind power development falls short of expectations, risk of fluctuations in raw material prices, risk of exchange rate fluctuations, risk of investment income and fair value fluctuations.