Incident: The company recently disclosed its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 45.09 billion yuan, +10.6% year over year; realized net profit to mother of 480 million yuan, +15.1% year over year. Looking at the fourth quarter of a single quarter, the company achieved operating income of 10.0 billion yuan (-16.5%) and net profit to mother of 0.7 billion yuan (-18.2%). In 2024 Q1, we achieved revenue of 10.44 billion yuan, +3.6% year-on-year; net profit to mother of 190 million yuan, +23.5% year-on-year.
24Q1 weighted ROE rebounded year over year, and we are striving to achieve revenue of 50 billion dollars for the whole year. The company's annual report revealed a 24-year target of 50 billion dollars in revenue, which is an 11% increase in revenue over 24. The company's 2023 weighted ROE was 7.6%, -2.8 pct year on year; 24Q1 weighted ROE was 2.9%, with a year-on-year change of +0.3 pct, after deducting non-ROE, a slight decrease of 0.15 PCT to 2.25%.
Secondary resource recycling production capacity continues to increase. By the end of '23, the first phase of Guiyan Resources (Yimen) Company's precious metals secondary resource enrichment and recycling modern industrial base project had been completed as scheduled. In 23 years, the company laid out key recycling markets in the Beijing-Tianjin-Hebei region, established Guiyan Resources (Dongying) Company, and built a green recycling base in North China.
The scale of the deep processing business has increased markedly, and sales of catalytic purifiers for motor vehicles have increased dramatically. However, industrial catalyst materials were affected by downstream chemical demand, and sales declined by 42%. Sales of special functional materials, information functional materials, and precursor materials all achieved sales growth of more than 60% in 23 years. Motor vehicle catalytic purifiers sold 7.31 million tons, yoy +106%. The first phase of the “12 Million Litres/Year Vehicle Exhaust Efficient Catalytic Conversion Technology Industrialization Construction Project” was completed and put into operation for 6 million liters.
Considering the decline in the price of palladium and rhodium and the increase in the recycling ratio of platinum group metals, we adjusted the company's product unit price assumption, considering that chemical capital expenditure in the deep processing business may still be sluggish. We lowered the sales assumption of precious metal industrial catalyst materials, considering that the company's downstream electronics, commercial vehicles, chemicals, etc. are still recovering weakly. We lowered the company's gross margin assumption and predicted that the company's 2024-2026 earnings per share will be 0.83, 1.06, and 1.23 yuan (originally 1.07 and 1.25 yuan in 24-25), respectively. The corresponding target price is 18.26 yuan, giving it a buy rating.
Risk warning
The macroeconomic growth rate has slowed, production and sales of traditional automobiles have fallen short of expectations, the production capacity of the company's new construction projects has been released or cannot be absorbed as expected, and there is a risk that precious metals prices will fluctuate greatly.