2024Q1's profit growth rate is impressive, demand recovery and leading position are prominent. It maintains that the “Buy” rating company achieved operating income of 15.22 billion yuan (-7.0% YoY, same below), net profit to mother of 1.44 billion yuan (-3.3%), and net profit from non-return to mother of 1.49 billion yuan (-1.4%) for the full year of 2023. 2024Q1 achieved operating income of 3.48 billion yuan (+19.4%), net profit attributable to mother of 220 million yuan (+20.6%), and net profit of non-return to mother of 240 million yuan (+54.3%). Considering that future demand is still uncertain, we lowered the 2024-2025 profit forecast and added the 2026 profit forecast. We expect net profit to be 17.97/20.08/2.30 billion yuan for 2024-2026 (the original value for 2024-2025 was 18.05/2.33 billion yuan), corresponding EPS was 1.93/2.16/2.50 yuan, and the PE corresponding to the current stock price is 13.9/12.5/10.7 times. We are optimistic that the company's leading position is highlighted. The market share continues to rise, maintaining the “buy” rating.
Profitability: Gross margin increased significantly. Cost reduction and efficiency continued to increase the company's gross margin of 26.2% (+2.5pct) in 2023. The sharp increase in gross margin was mainly due to the company's cost reduction and efficiency strategy and the reduction in raw material costs. The period cost ratio was 13.9% (+2.0pct). Among them, the sales/management/R&D/finance expense ratios were +2.7%/+6.4%/+4.6%/+0.2%, respectively, +0.3/+0.9/+0.3 pct.
Under the combined influence, the company's net sales margin in 2023 was 9.8% (+0.2pct), and the deducted non-net interest rate was 9.8% (+0.6pct). The 2024Q1 company's gross profit margin was 22.1% (-1.6pct); the period expense ratio was 13.9% (-3.1 pct).
Under the combined influence, the company's net sales margin was 6.5% (+0.3pct), after deducting the non-net profit margin of 7.0% (+1.6pct).
In terms of operating capacity, 2024Q1's operating cash flow was 80 billion yuan (-23.1%), mainly due to the extension of the accounting period at the end of 2023; capital expenditure was 210 million yuan (-26.2%). The main company's smart factory construction has basically been completed, and we expect CAPEX to continue to decline in the future.
Revenue split: Downstream demand in 2023 is under pressure from various businesses. 2024Q1 demand is picking up, and the company's paper boutique packaging/packaging ancillary products/environmentally friendly paper and plastic products achieved revenue of 110.4/26.1/1.06 billion yuan respectively in 2023, -6.6%/-7.9%/-4.7% year-on-year. The decline in various businesses is expected to reduce business orders due to cooling downstream demand, and the cigarette pack business is expected to maintain positive growth. 2024Q1's revenue has returned to normal growth, and we expect all businesses to show a steady and positive trend as subsequent demand picks up.
Company highlights: The global delivery layout is basically complete, and high dividends continue to give back to the shareholders' supply chain. The company's global delivery layout has been basically completed. Currently, 7 major production bases have been established in Vietnam, India and other places. The intelligent progress of domestic factories continues to advance, and smart factory construction in Hunan, Suzhou, Chengdu and other places was completed in 2023. Looking forward to 2024, the company will continue to promote the smooth commissioning of overseas production bases and start construction of new factories in Mexico, the Philippines, etc. We are optimistic that further improvements in the company's global layout will lead to deep development of supply chain barriers and drive the company's revenue performance Further growth. In terms of dividends, 2023H2 plans to pay a dividend of 6.2 yuan for every 10 shares, with a total dividend of 570 million yuan, plus the 2023H1 dividend of 300 million yuan, accounting for 60.3% of the company's net profit in 2023. Based on the closing price on April 29, 2024, the company's dividend rate is 3.5%. At the same time, the company plans to implement a new round of share repurchases in 2024, with a repurchase amount of 1-2 billion yuan. High dividends will continue to give back to the company's shareholders.
Risk warning: downstream demand falls short of expectations, industry competition intensifies, raw material prices rise