Event: The company released its 2024 quarterly report. 2024Q1 achieved revenue of 5.944 billion yuan, +24.62% year over year; net profit to mother of 822 million yuan, +38.11% year over year; net profit after deduction of 791 million yuan, +40.68% year over year.
The main gypsum board business is developing steadily, and the contributions of the two wings, such as paint and waterproofing, are gradually showing. The company's revenue increased by 24.62% in 2024Q1. The company completed the transfer of 51% of Lighthouse Coatings's shares and the joint restructuring of Garberry within 2023. The paint business was further strengthened. At the same time, the company's business was resilient, and the main gypsum board business developed steadily. The price of 2024Q1 gypsum board remained stable, and sales increased steadily.
Gross profit margin increased steadily, and expenses increased during the period due to mergers and acquisitions of subsidiaries. 2024Q1 company's gross sales margin was 28.65%, year-on-year change +1.74pct; in terms of the period expense ratio, 2024Q1 sales expense ratio was 4.94%, with a year-on-year change of +0.57 pct. On the one hand, sales expenses increased due to the company's new mergers and acquisitions in the current period, and on the other hand, labor costs for the company's subsidiaries increased; management expenses rate 4.67%, year-on-year change -0.64 pct; R&D expense ratio was 3.57%, year-on-year change +0.47pct; financial expense ratio 0.24%, year-on-year change -0.17pct .
Net cash flow from operating activities improved as a result of the merger and acquisition of Garbaoli. 2024Q1's net cash flow from operating activities was -25.62 million yuan, +91.52% year-on-year, mainly due to an increase in net cash flow from operating activities of new mergers and acquisitions subsidiaries.
Profit forecasting and investment ratings: With the further deepening of state-owned enterprise reforms, under the strategic guidance of the company's “two wings in one, global layout”, the main gypsum board industry will continue to increase in market share, and the keel support, waterproofing, and coating businesses will also continue to contribute to rapid growth. Considering the steady operation of the company, the two-wing business and the gradual growth of the “gypsum board+” business, we maintain an estimated net profit of 43.80/51.38/5.764 billion yuan in 2024-2026, respectively. The corresponding PE is 12X/10X/9X, respectively, maintaining a “buy” rating.
Risk warning: risk of fluctuations in the real estate industry, risk of macroeconomic fluctuations, risk of rising raw materials and energy prices, risk of new business development falling short of expectations.