Key points of investment
23Q4 results were generally in line with expectations, and 24Q1 fell short of expectations. The company's revenue for 23 years was 12 billion yuan, down 4%; net profit to the mother was 2.5 billion yuan, down 37%, and the gross profit margin was 10pct; of these, 23Q4 revenue was 2.9 billion yuan, -11%/-16%, net profit to mother 400 million yuan, -52%/-50% YoY, 23Q4 gross profit margin 28%, -14pct/-7pct, 23Q4 performance was basically in line with expectations. 24Q1 revenue of 2.3 billion yuan, -9%/-21% YoY, net profit to mother of 200 million yuan, -76%/-63% YoY, gross profit margin 19%, 27pct decrease, 10pct fall short of expectations.
The average price decreased by 14% in '23, and shipments are expected to maintain 35%-40% growth in '24. The company's diaphragm revenue in '23 was 10.1 billion yuan, down 10%, gross profit margin 38%, and 12 pcts, of which overseas revenue was 2 billion yuan, accounting for 17%, up 6 pcts, gross profit margin 41%, and a decrease of 12 pcts. Shipments of 4.95 billion square meters in '23, an increase of 4%, corresponding to the average price of 2.31 yuan/square meter (tax included), and a decrease of 14%. Of these, in 23Q4, we expect to ship about 1.25 billion square meters, which is basically flat from month to month. Shipments in 24 years are expected to reach 65-70 billion square meters, maintaining a year-on-year increase of 35%-40%.
The profit of a single flat fell sharply in 24Q1, and it is expected that the profit of single ping fell to 0.2 yuan+ for the full year of 24. We estimate that in '23, the non-net profit of single flat diaphragm deduction was about 0.5 yuan, the same decrease of 38%. Among them, 23Q4 single flat deduction non-net profit was about 0.3 yuan, and the ring fell 37%, which was mainly fully reflected in the company's active price reduction strategy Q4. 24Q1 single flat deduction non-net profit was 0.12 yuan, a drop of 60%. Of these, the bonus affected about 100 million yuan in profit. If added back, we estimated that the operating profit of single flat divider was 0.2 yuan, a decrease of 33%. At present, wet diaphragms are at the bottom of the price. Since Q2, along with the recovery of the company's production capacity utilization rate, the share of overseas shipments has gradually increased, and after the price reduction, the share of coating in the company's shipments to major customers has further increased, further increasing the overall proportion of coated films to hedging price pressure to a certain extent. We expect the profit of a single diaphragm to drop to 0.2 yuan+ in 24.
Operating cash flow was impressive in '23, and inventories continued to rise. Expenses for the 23-year period were 1.4 billion yuan, an increase of 8%, and an increase of 1 pct, of which the 23Q4 period cost was 300 million yuan, -43%/-20% compared to the same period, the cost rate 10%, -6/-0.4 pct compared to the same period, and 300 million yuan during the 24Q1 period, -17%/+15% compared to the same period, the cost rate 15%, and -2/+5pct compared to the same period. The company's net operating cash flow in '23 was 2.7 billion yuan, an increase of 430%; in 24Q1, the net operating cash flow was 500 million yuan, a decrease of 37%. Inventory at the end of 24Q1 was 3.4 billion yuan, up 13% from the end of '23. We expect to correspond to about 1.9 billion square meters of inventory (including B products).
Profit forecast and investment rating: Considering the decline in the price of the company's products, we downgraded the company's 2024/2025, and added the 2026 net profit forecast to 15.1/21.9/3.20 billion yuan (the original forecast for 2024-2025 was 39.40/5,022 billion yuan), -40%/+45%/+46%, corresponding PE is 26/18/12 times. Considering that the company is a leader in the diaphragm industry, the long-term profit growth rate is expected to recover and maintain the “buy” rating.
Risk warning: sales volume falls short of expectations, profit level falls short of expectations