Introduction to this report:
The company's global production capacity layout has basically been completed, and the future will focus on capital efficiency and shareholder returns. In 2023, the cash dividend ratio is 60.3%, and the dividend rate is 3.4%; in 2024, it is planned to implement a new round of repurchases ($1-2 billion), which highlights the long-term investment value.
Key points of investment:
Adjust profit expectations and maintain an “gain” rating. The company's 2023 performance was slightly lower than expected. Considering the company's new customer introduction cycle, we adjusted the 2024-2025 profit forecast and added the 2026 profit forecast. The company's 2024-2026 EPS is 1.92/2.22/2.56 yuan (the original value in 2024-2025 was 1.97/2.17 yuan). Referring to the industry valuation level, the company was given 17.1xPE in 2024, and the target price was lowered to 32.9 yuan to maintain the “gain” rating.
Revenue growth rate improved in 23Q4, and recovery accelerated in 24Q1. 23Q4 The company's revenue was positive year over year, mainly due to overall economic recovery. 24Q1 revenue rebounded significantly, and the absolute value slightly exceeded the same period in '22. 3C electronics, tobacco and alcohol packaging were all repaired, and the growth rate of all businesses was balanced. Looking back, new consumer electronics customers are actively expanding, and the compound growth rate is expected to reach double digits in the future. The target growth of cigarette packs is higher than the overall level. Under the reshuffle of the industry, the company relied on professional experience to seize new bidding opportunities.
Factory investment disrupted short-term profits, and cost reduction and efficiency continued to advance. The 24Q1 company's gross margin/net net profit margin was 22.1%/7.0%, -1.6 pct/+1.6 pct year on year. The decline in gross margin was mainly due to the increase in Mexican factory construction, upfront expenses, and a slight increase in raw material costs. The increase in net interest rate was mainly due to the financial expense ratio - 2.56pct. The appreciation of the US dollar led to an increase in exchange earnings. The company's smart factory efficiency improvement, cost control, and the shutdown of loss-making plants & departments are expected to increase profitability.
Global delivery capacity formed and international customer expansion accelerated. 1) Southeast Asia: Promote the commissioning of the Surabaya project in Indonesia, the Jakarta project in Indonesia, the Pyongyang project in Vietnam, and the Delhi project in India to further improve the international supply chain; develop new categories of leather box packaging in the Philippines. 2) Mexico:
The plant is scheduled to be put into operation within 24 years, opening up a new market for heavy packaging.
Risk warning: Prices of raw materials continue to rise, downstream consumer demand falls short of expectations, etc.