Incident: On April 23, 2024, the company released the 2023 annual report and the 2024 quarterly report. The full year of 2023 achieved revenue of 1,141 million yuan, -17.75%; net profit to mother of 167 million yuan, or -35.79% year on year; deducted non-net profit of 145 million yuan, or -39.19% year over year. Among them, Q4 achieved revenue of 368 million yuan in a single quarter, +51.76% year on month, +60.54% month on month; net profit to mother of 0.12 million yuan, -73.54% year on month, -72.27% month on month; after deducting non-net profit of 0.03 billion yuan, -93.33% year on year and -93.42% month on month. The company achieved revenue of 302 million yuan in the first quarter of 2024, +31.02% YoY, -17.98%; net profit to mother of 0.28 million yuan, -49.84% YoY, +142.45% month-on-month; deducted non-net profit of 223 million yuan, or -47.70% YoY, +715.11% YoY.
The volume and price of container paint dropped sharply in 2023, and sales of wind power paint increased rapidly. The company's sales volume of wind power paint, container paint and other industrial coatings in 2023 was 12,395, 35583, and 2,560 tons, respectively, +53.91%, -17.25%, and +6.04%; the prices were 4.12, 1.64, and 17,700 yuan/ton, respectively, -17.26%, -24.92%, and -5.50% year-on-year, mainly due to the collective drop in raw material prices. 2023H2/2024Q1 sales of wind power paint, container paint, and other industrial coatings were 6194/2168, 22647/14756, and 1282/294 tons, respectively. 2023H2 -0.10%, +75.06%, and +0.30% month-on-month, container paint sales rebounded significantly.
The container industry is expected to recover marginally, and is optimistic about the long-term growth of wind power, ships, and large manufacturing sectors.
The container industry is expected to enter an upward cycle in 2024, gradually easing replacement demand due to overruns due to overmanufacturing in 2021; the wind power industry has good room for development in a dual carbon context; the company can enter the field of marine coatings based on existing end customer recognition advantages and resources, while seeking breakthroughs in new fields such as superbridge coatings & photovoltaics. Construction of the Zhuhai project began at the end of 2023. The total paint production capacity is expected to reach 140,000 tons after production, a net increase of 50,000 tons over the current production capacity, which can support the growth of downstream demand and is optimistic about the company's long-term growth.
Investment advice: The leading position in the container & wind power paint segment is stable, and the IPO project opens up room for future growth. We expect the company to achieve operating income of 1,484/18.54/2,076 billion yuan in 2024-2026, and a net profit of 2.74 to 3.48/372 million yuan. The corresponding PE was 14.4/11.3/10.6 times, respectively, maintaining the “gain” rating.
Risk warning: risk of large fluctuations in raw material prices; risk of uncertainty about the progress of the IPO project; risk of downstream demand falling short of expectations.