The company achieved net profit of 0.38 billion yuan in '23, down 74.76% year on year. The company released its annual report for '23 and quarterly report for '24, and achieved revenue of 1,656 billion yuan in '23, +2.30%. Net profit to mother/ net profit after deduction of net profit to mother was 0.38/0.19 billion yuan, -74.76%/-84.83% YoY. Among them, Q4 achieved revenue of 390 million yuan in a single quarter, -7.13% year-on-year, and net profit attributable to mother/net profit after deduction of -0.79/-84 billion yuan, which turned into a year-on-year loss. The 24Q1 company achieved revenue of 340 million yuan, -9.89% year over year, and net profit attributable to mothers/net profit excluding non-return to mother was 0.32/026 million yuan, -2.75%/-12.51% year over year. Excluding the impact of Yuyuan's environment on the company's revenue and profit during the same period of the year, 24Q1 operating revenue/net profit to mother increased 15.07%/6.48% year-on-year, respectively.
Clean air/energy efficiency revenue in '23 was -3.64%/+13.34% year on year, respectively, the company's clean air sector achieved revenue of 980 million yuan, -3.64% year over year. Downstream demand was slightly sluggish mainly due to weak overall economy. Among them, clean air equipment and filter materials each achieved revenue of 416/564 million yuan, -2.8%/-4.3% year on year. Since the company transferred 70% of the shares held by Youyuan Environmental to MANN+HUMMEL at the end of October 23 and carried out a share settlement, Youyuan Environment was no longer included in the scope of consolidated statements since November 23, causing a certain negative drag on the sector's revenue. 24Q1's filter revenue increased 10.66% year on year, mainly due to increasing market expansion and enhancing R&D and innovative product drivers. The company's high-efficiency and energy-saving sector achieved revenue of 650 million yuan, +13.34% over the same period. The company actively expanded new products and applications, and achieved steady growth in the application fields of glass fiber cotton and VIP film products. Among them, glass fiber cotton revenue +23.19% reached 282 million yuan, mainly benefiting from the company's active layout in green buildings and home appliance applications. The construction project with an annual output of 50,000 tons of high-performance ultra-fine glass fiber wool in '23 has already been partially put into operation. In addition, the part under construction is expected to be put into operation in '24. VIP film revenue was $42 million, while demand for medium- and high-efficiency inorganic vacuum insulation panels and core materials declined, with revenue of -12.86% reaching $158 million over the same period last year. 24Q1's high-efficiency and energy-saving insulation products increased 25.28% year-on-year.
Profitability declined in '23, improved month-on-month in 24Q1
The company's overall gross profit margin in '23 was 21.92%, -3.87pct year on year. Among them, the gross margin of the clean air/energy efficiency sector was 26.4%/15%, and -0.9/-8.0 pct year on year, respectively. This was mainly due to a combination of factors such as continuous rise in energy prices and insufficient release of production capacity for new construction projects, and the increase in product unit costs. Among them, the overall gross profit margin for Q4 in a single quarter was 12.75%, -8.48/ -13.18 pcts yoy/month-on-month, respectively. The cost ratio for the 23-year period was 16.79%, -0.72pct year on year, with sales/management/R&D/finance expense ratios of -0.26/ -0.47/ -1.10/+1.11pct year on year, respectively. The increase in financial expenses was mainly due to the cost of interest on fund-raising projects, which ultimately achieved a net interest rate of 2.81%, -6.74pct, 24Q1 company's gross profit margin 21.16%, year-on-month, and a net profit margin of 10.02%, +0.54 pct year on year, respectively. The balance ratio at the end of 23 was 26.77%, year-on-year -7.72 pct, and the capital structure was optimized.
Medium- to long-term growth is still worth looking forward to, maintaining a “buy” rating
We believe that with the gradual release of production capacity in the company's fund-raising projects, the share of revenue from high-value-added products will increase, which is expected to drive a gradual improvement in gross margin. The company's dividend rate for 23 years was as high as 80%, and plans to pay dividends in mid-2024. Considering the significant decline in the company's performance, the 24-25 net profit forecast was lowered to 120/170 million yuan (previous value: 26/320 million yuan), and the net profit forecast for 26 years was increased by 230 million yuan, corresponding to 1.4/1.3/1.2 times PB for 24-26, which is lower than the average PB value of comparable companies, maintaining a “buy” rating.
Risk warning: demand release, production capacity implementation falling short of expectations, rising raw material prices, etc.