The company achieved net profit deducted from mother of 45 million yuan in the first quarter, down 37.83% year on year. The company released its quarterly report for the year 24, achieving revenue/net profit of 581/0.51 billion yuan, -3.67%/-37.56% year-on-year, and realized net profit of 45 million yuan without return to mother, or -37.83% year-on-year.
The 24Q1 price decline dragged down revenue, Q2 prices rebounded, and the company's 24Q1 revenue fell 6.14% month-on-month. We expect this is mainly due to the large price decline. Benefiting from overseas inventory demand, exports of glass fiber and products totaled 525,000 tons in the first quarter of this year, +12.4% over the same period last year. Overseas demand continued to improve. Domestic demand for glass fiber is also gradually picking up. As of the end of March, the industry inventory was 794,000 tons, -12%/-1% month-on-year, of which the inventory of glass fiber enterprises in Jiangsu Province was 6,000 tons, -13%/-33% month-on-year. In terms of price, the price of 24Q1's 2400tex wound direct yarn continued to decline. The average price fell 6% month-on-month to 3,046 yuan/ton, and 26% year-on-year. At the end of March this year, the company began to raise the prices of its Changhai and Tianma glass fiber products. Prices have continued to rise since April. As of April 23, the median price of 2,400tex wound direct yarn reached 3,450 yuan/ton. The company mainly sells glass fiber products, and the price resilience is relatively strong. As of the end of 24Q1, the number of inventory turnover days was about 49.01 days, +2.5/-4.7 days month-on-month and year-on-year, respectively, and still maintained a relatively benign level. The company currently has 3 pond kiln production lines in production, with an annual production capacity of 240,000 tons. The first phase of the 600,000-ton construction project is expected to be put into operation in 24, and construction of the second line has already started. In the future, with the gradual recovery of domestic demand and the release of overseas storage demand, the company's performance growth is still quite flexible.
Expense rates declined year-on-year, and profits recovered upward month-on-month
In Q1 '24, the company achieved a gross profit margin of 21.55%, +2.41/-6.24pct month-on-year, respectively. The cost ratio for the period was 12.87%, or -0.68pct year on year. Among them, the sales/management/R&D/finance expense ratios were +0.71/+1.14/ -1.37/ -1.15 pct year over year, respectively. The increase in sales expenses was mainly due to an increase in salary and salary, and the decline in financial expenses was mainly due to an increase in bank interest income. In the end, the net interest rate was 8.72%, +7.48/ -4.75pct month-on-year respectively, 7.75% net interest rate after deduction of non-return mother, and +5.16/-4.36pct month-on-month, respectively, and profitability was restored. The company's balance ratio at the end of 24Q1 was 32.47%, +8.30pct year-on-year. Net operating cash flow was 53 million yuan, -53 million yuan year on year, mainly due to revenue ratio of -2.15 pct year on year reaching 88.29%.
Optimistic about medium- to long-term endogenous growth and maintain a “buy” rating
We continue to be optimistic about the endogenous growth brought about by the company's medium- to long-term capacity expansion, maintaining the previous forecast, and giving the 24-26 net profit forecast to 3.7/4.5/5.2 billion yuan. Referring to comparable company valuations, we gave the company a target PE of 16x for 24 years, corresponding to a target price of 14.35 yuan, maintaining a “buy” rating.
Risk warning: The company's production capacity investment progress falls short of expectations, demand for glass fiber has declined, industry production capacity has expanded drastically, and the foreign trade environment has deteriorated.