Description of the event
The company plans to pay a total dividend of 570 million yuan in 2023 and 300 million yuan in mid-2023, with a total dividend of 870 million yuan, with a dividend ratio of 60.3%. In 2023, the company achieved revenue/net profit to mother/ net profit after deducting non-net profit of 15.223/1,444 billion yuan, a decrease of 7%/3%/1%; 2023Q4 achieved 44.16/4.53/458 million yuan, +2%/-3%/+5%; and 2024Q1 achieved 34.76/2.19/ 243 million yuan, an increase of 19%/21%/54%.
Incident comments
2023A & 2023Q4: Demand improved quarterly, 2023Q4 revenue returned to positive growth, and lower costs led to higher profit margins.
1) At the revenue level, the annual revenue decline is mainly due to the slow recovery in downstream demand. Businesses such as 3C packaging, wine bags, and eco-friendly packaging are all under pressure. The cigarette pack business is expected to achieve positive year-on-year growth. As demand gradually improves, especially entering the peak consumer electronics season in the second half of the year, 2023Q1-2023Q3's revenue decline narrows quarterly, and 2023Q4 revenue is returning to positive growth. Among them, 3C packaging is expected to resume positive growth in the fourth quarter.
2) At the profit level, lower raw material prices are compounded by improvements in smart factory efficiency, and profit margins are rising. Referring to the Paper Industry News data, the tonnage price of corrugated paper/white cardboard/coated paper/double adhesive paper decreased by 17%/17%/1%/2% year-on-year in 2023. In 2023, the company's gross margin, net profit margin, and net profit margin increased by 2.5/0.4/0.6 pcts, after deducting non-net profit of 1,494 billion yuan, of which Renhe (holding 60% of shares) and Huabaoli (holding 60% of shares) contributed about 0.17/0.11 billion yuan in non-net profit. The performance commitment completion rates were 37%/45%, respectively, mainly due to pressure on consumer electronics demand. In 2023, the company's sales/management/R&D/finance ratio increased by 0.3/0.9/0.5/0.3 pct. The increase in financial expense ratio was mainly due to a year-on-year decrease in current exchange earnings. 2023Q4 maintained a good level of gross margin/net attributable interest rate/deducted non-net interest rate, with a year-on-year ratio of +1.9/-0.6/+0.2pcts, and a sales/management/R&D/finance expense ratio of +0.7/+0.5/-0.2/-0.9 cpt year-on-year.
2024Q1: Improved demand and order repair combined with a low base, and revenue and performance achieved relatively rapid growth. Downstream customers such as 3C brands were in the inventory removal stage during the same period last year. Revenue from various packaging products was under pressure. Downstream demand improved year-on-year in 24Q1, and all businesses are expected to resume growth at a low base. 2024Q1 Company's gross margin/net accrued interest rate/deducted non-net profit margin was -1.6/+0.1/+1.6 pcts, and the sales/management/R&D/finance expense ratio was +0.1/-0.5/-2.6 pcts year over year. The slight year-on-year decline in gross margin is expected mainly due to new plant investment but no output, and raw material prices are slightly higher than the same period last year. The year-on-year decline in financial expenses ratio is mainly due to the appreciation of the US dollar and the increase in exchange earnings.
Outlook: In the short term, there has been a good trend in downstream demand recovery since 2024. In the medium to long term, emphasis is placed on improving quality and efficiency internally, and continuing to increase internal customer share. Externally, Yutong is expected to further consolidate its leading position in paper bags. As the leading paper package leader, Yutong focuses on the recovery of downstream demand in the short term to drive a steady upward trend in revenue. At the medium- to long-term level, the company will improve internal quality and efficiency, promote smart factory construction, continue to reduce costs and increase efficiency, continue to increase customer share externally, promote the introduction of new customers, continue to expand businesses such as cigarette packs and environmentally friendly packaging, and is optimistic about the volume of new businesses, driving Yutong Technology's market share to continue to increase. In addition, the company previously promised that the three-year dividend rate for 2023-2025 will not be less than 60%, and the 2023 dividend ratio will be 60.3%, which will significantly increase its dividend capacity. The company's net profit due to mother in 2024-2026 is estimated to be 1,70/20.1/35 billion yuan, and the corresponding PE is 14/12/10X.
Risk warning
1. Increased market competition;
2. Prices of raw materials fluctuate greatly.