23Q1-4 及24Q1 归母净利率分别为4.3%、-0.2%、3.8%、5.6%、5.2%，24Q1 毛利率及费用率环比均回落，归母净利润率环比相对稳定。Incident: The company released its 23 annual report and 24 quarterly report, and its performance grew steadily. The company achieved revenue of 9.801 billion yuan, +14.37% year over year; realized net profit of 333 million yuan, -4.92% year over year; realized net profit deducted from non-mother of 364 million yuan, +88% year over year; realized deducted non-net profit of 299 million yuan, -6.53% year over year. Looking at the single quarter, Q4 achieved revenue of 2,978 billion yuan, +21.25% YoY, +39.29%; realized net profit to mother of 167 million yuan, +121.72% YoY; realized deducted non-net profit of 157 million yuan, +125.19% YoY. Q4's profit performance in the single quarter was outstanding. 24Q1 achieved operating income of 1,845 million yuan, -10.45% year over year; realized net profit of 95 million yuan, +6.72% year over year; net profit after deduction of 88 million yuan, +7.92% year on year.
Gross margin increased quarterly in '23, and declined somewhat in 24Q1.
1) In terms of profitability, the company achieved a gross profit margin of 33.15% (+1.19pct) and a net profit margin of 3.40% (-0.69pct); in a single quarter, 23Q1-4 and 24Q1 gross margins were 27.46%, 29.2%, 34.04%, 39.94%, and 34.52%, respectively. The gross margin increased quarterly and declined in 24Q1, mainly affected by fluctuations in pulp prices.
23Q1-4 and 24Q1 net profit margins were 4.3%, -0.2%, 3.8%, 5.6%, and 5.2%, respectively. The 24Q1 gross margin and expense ratio declined month-on-month, and the net profit margin to mother was relatively stable month-on-month.
2) In terms of cost ratios, the company's sales/management/finance/R&D expenses in '23 were 22.51%/4.35%/-0.35%/2.73%, respectively, +2.10pct/+0.01pct/+0.36pct/+0.03pct, respectively. The increase in sales expenses was mainly affected by increased promotional activities. Product promotion expenses in '23 were 1,406 million yuan, an increase of 357 million yuan over the previous year. 24Q1 sales, management, finance, and R&D expenses rates were 20.47%, 5.67%, 0.11%, and 3.53%, respectively, +3.78pct and +2, respectively.
17pct, +0.26pct, +1.01pct
3) In terms of cash flow, the company achieved operating cash flow of 1,242 billion yuan in '23, +217.08%; the ratio of operating cash flow/net income from operating activities was 417.88%; and operating cash flow performance was impressive in '23. 24Q1 operating cash flow - $145 million, related to a large increase in inventory (inventory at the end of 24Q1 was $1,514 million, up $185 million from the end of '23).
4) In terms of operating capacity, the company's inventory/accounts receivable turnover days in '23 was 89.02/46.83 days, compared with -15.29/ -0.68 days, respectively. Operational efficiency improved markedly.
By product: The personal care category is gradually being released. 1) Household paper: 2023 revenue of 9.662 billion yuan (+15.71% yoy); gross margin of 32.97% (+0.64pct.). Personal care and others: 2023 revenue of $139 million (+172.55% yoy); gross margin of 45.79% (-4.71pct.).
Investment advice: Short-term company profits are disrupted by pulp prices. In the long run, the release of production capacity will have a scale effect, and the deepening of the high-end route will promote steady growth in the company's performance, and market share is expected to increase further. The company's net profit for 2024-2026 is estimated to be $550, 6.18, and 687 million yuan (the value before 24-25 was 5.32 billion yuan and 780 million yuan, adjusted according to 23 results), and the corresponding PE is 21, 19, and 17 times, maintaining a “buy” rating.
Risk warning: risk of price fluctuations of raw materials and products, risk of production capacity falling short of expectations, etc.
