Incidents:

The company published its 2023 annual report and 2024 quarterly report. In 2023, we achieved revenue of 4.98 billion yuan +19% year over year, and net profit of 780 million yuan +25% year over year. 2024Q1 achieved revenue of 1.27 billion yuan +3% year over year, and net profit to mother of 220 million yuan +33% year over year.

Comment:

2023Q4 has seen a high increase in profits. The company achieved revenue of 1.31 billion yuan +9% year-on-year in 2023Q4, and net profit of 160 million yuan +31% year-on-year.

Cash flow performance was excellent in 2023, and profit margins improved. In 2023, the company achieved a gross sales margin of 28.0% +1.2pct, a net sales margin of 15.6% yoy +0.8pct, and a net operating cash flow of 1.05 billion yuan +315% yoy, which is the best performance in history.

Revenue and gross margin increased both domestically and internationally in 2023. In 2023, the company achieved domestic/overseas revenue of 35.8/1.36 billion yuan, +17%/26%, accounting for 73%/27%, and a gross profit margin of 26.0%/31.8%, and +0.3pct/4.3pct year-on-year.

Sales of all product categories increased across the board in 2023. In 2023, the company achieved sales of 37.6/273,000 tons of molded bottles/brown bottles, +24%/29%; sales of control bottles/ampoules/butyl rubber stoppers series/aluminum-plastic cap plastic bottle series of 16.5/17.5/53.9/9.1 million units, +20%/13%/14%/0.5% year over year.

2024Q1 profit margin cash flow continues to improve across the board. 2024Q1 achieved a gross sales margin of 30.6% yoy +6.9pct, a net sales margin of 17.4% yoy +4.0pct, and a net operating cash flow of 300 million yuan +40% yoy.

Borosilicate production capacity is progressing steadily, seizing the opportunity for consistent evaluation. As consistency evaluations and procurement continue to be promoted, the company's demand for borosilicate molded bottles has further increased. In 2023, the company built a medium borosilicate molded bottle plant workshop (with two kilns), 1 of which was put into operation in November 2023.

Maintain a “buy” rating. Revenue from 2024 to 2026 is expected to be $58/66/75 billion, +16%/15%/14% year over year, and net profit to mother of 9.5/11.4/1.35 billion yuan, +23%/20%/19% year over year, corresponding PE is 20/17/14 times.

Risk warning: downstream demand falls short of expectations, raw fuel prices fluctuate, and the company's performance falls short of expectations