Weak demand was compounded by a relatively high base, and both revenue and profit declined slightly. 2024Q1 achieved operating income of 7.15 billion yuan, -4.6% year on year, net profit of 350 million yuan, -9.8% year on year, net profit without return to mother of 310 million yuan, -4.4% year on year, EPS was 0.14 yuan/share. Affected by the slow pace of resumption of work, continued weak demand performance, and relatively high base during the same period, revenue profit declined slightly year on year. The revenue growth rate of 23Q1-23Q4 was +18.8%/+4.0%/+5.4%/-4.8%, respectively, and the high base pressure on the revenue side is expected to gradually improve.
Gross margin increased month-on-month, and expense ratios increased. 2024Q1 achieved a comprehensive gross profit margin of 29.7%, +1.0pp/month-on-month. It is expected that due mainly to changes in revenue structure and falling prices of some raw materials, some engineering projects with low profitability will be settled centrally in 23Q4.
The cost ratio for the period was 20.4%, +1.1 pp/month over month. Among them, sales/management/finance/R&D expense ratios were +0.51 pp/ +0.25 pp/ -0.01 pp/+0.32 pp year on year, respectively. Affected by the decline in revenue scale, cost dilution weakened year on year. The net interest rate was 4.8%, -0.26pp year on year, and +5.68pp month-on-month. The month-on-month increase was mainly due to the impact of the 2023Q4 centralized calculation of asset and credit impairment losses. 2024Q1 totaled 163 million yuan, or -214 million/month-on-month -270 million.
Operating cash flow improved year on year, and the scale of accounts receivable decreased year over year. 2024Q1 achieved net operating cash flow of -1.89 billion yuan, compared to 3.81 billion yuan in the same period last year, with a year-on-year decrease of 1.92 billion yuan. The main reason was a year-on-year decrease of 21.4 yuan in cash payments relating to other operating activities. The payout ratio and payout ratio were 1.03/1.35, respectively, compared to 1.1/1.44 for the same period last year. As of the end of March 2024, accounts receivable and notes receivables/other receivables/contract assets were $114.2/43.6/2.29 billion, respectively, compared with -8.1/+6.7/- $3.9 billion.
Risk warning: The decline in real estate investment exceeds expectations; asphalt prices have risen sharply; accounts receivable growth has exceeded expectations. Investment suggestions: continue to adjust the business structure, maintain the “buying” company as a leader in the waterproof industry, continue channel business transformation, and actively develop the increase in overseas market contributions. As high base pressure improves and the business structure continues to adjust, continue to be optimistic about the improvement in business quality and growth resilience brought about by the company's channel changes and category expansion. EPS is expected to be 1.16/1.43/1.69 yuan/share in 24-26, corresponding to PE 11.2/9.1/7.7x, maintaining a “buy” rating.