Description of the event
In 2023, we achieved revenue of 4.982 billion yuan, an increase of 18.98%; net profit of 776 million yuan, an increase of 25.48% year on year; realized deducted non-net profit of 742 million yuan, an increase of 23.07% year on year. Equivalent to Q4 revenue of $1,308 million, up 9.2% year on year; attributable net profit of 162 million, up 30.84% year on year; deducted non-net profit of 151 million, up 24.69% year on year.
2024Q1 achieved revenue of 1,267 billion yuan, up 2.5% year on year; net profit of 220 million, up 32.59% year on year; deducted non-net profit of 210 million, up 36.14% year on year.
Incident comments
Revenue increased in 2023 and profits recovered. The company achieved the same increase of 18.98% throughout the year. By product, molded bottles also increased by 29.36% (the growth rate of borosilicate molded bottles is expected to be faster), brown bottles increased by 29.10%, controlled bottles increased by 18.05%, and rubber stoppers increased by 12.66%. In terms of profitability, the gross profit margin for the current period was 28.0%, an increase of 1.2 pct over the previous year. On the one hand, it benefited from the gradual decline in raw material prices, and on the other hand, the share of borosilicate with high gross profit increased. The full year achieved a period rate of 8.8%, an increase of 0.4 pct over the previous year, with sales and management rates increasing by 0.3 pct. Other income increased by 10.25 million due to VAT deductions, investment income increased by 16.68 million due to bank financial management, fair value changes increased by 19.1 million in income from transactional financial assets, and decreased income from asset disposal by 10.26 million. In the end, the net vested interest rate was 15.6%, an increase of 0.8 pct.
Looking at a single quarter, revenue growth slowed after the base was raised, and profits remained at a good level. 2023Q4 revenue also increased by 9.2%, and the growth rate declined mainly due to the base for the same period. Q4 gross profit margin was 27.5%, up 4.7 pcts year over year. The rate increased drastically by 4 pct to 12.2% during the Q4 period. Among them, the management rate increased by 3.2 pct due to an increase in bonus accruals, etc., and the sales rate also increased by 0.9 pct. In the end, the net vested interest rate was 12.3%, an increase of 2 pcts. 2024Q1 revenue also increased by 2.5%. It is expected that sales of borosilicate will continue to accelerate, and the decline in trade revenue may have an impact. 2024Q1 achieved a gross profit margin of 30.6%, an increase of 6.9 pct over the previous year; the rate during the 2024Q1 period was 8.9%, an increase of 1.5 pct, which was still mainly due to the impact of management fees due to the increase in bonus accrual; in the end, the net profit margin was 16.6%, an increase of 4.1 pct over the previous year.
The quality of operations continues to improve. In terms of operating quality, the company achieved a revenue ratio of 94.5% in 2023, a year-on-year increase of 5.7pct, and a net cash ratio of 135.1%, an increase of 94.3pct year-on-year. The operating quality performance was excellent. Furthermore, the balance ratio remained low. At the end of 2023, it was only 19.1%, down 1.6 pcts year over year. In addition, the company plans to pay a cash dividend of 265 million, with a dividend rate of 34.22%.
Demand for borosilicate is improving, and we are optimistic about steady growth in performance. With the volume collected and released in the 8th and 9th batches, the penetration rate of borosilicate in the industry accelerated. It is estimated that the penetration rate of borosilicate molded bottles in the industry is expected to increase to 15-20% in 2024, and the company has fully benefited as an industry leader.
Furthermore, the company performed well in the brown bottle and daily chemical bottle and export business in 2023, and is expected to continue in 2024. On the cost side, the price of soda ash declined year on year, and is still expected to decline in the future. The high level of borax is also expected to fall. Combined, the share of borosilicate in the medium has increased, and profitability is expected to remain high.
Optimistic about the company's growth and maintain a “buy” rating. The company is expected to achieve performance of 9.9 billion yuan and 1.15 billion yuan in 2024-2025, corresponding to PE 19 or 17 times, maintaining the purchase rating.
Risk warning
1. New product expansion falls short of expectations;
2. Increased market competition.