Core views
The company released its 2023 annual report, with total revenue of 3,516 billion yuan, +24.21% year-on-year, net profit to mother of 352 million yuan, +63.43% year-on-year, basic EPS of 0.63 yuan, and an average ROE of 13.07%. The company produced 56,000 tons of seamless pipes (+90,000 tons year on year) and 35,000 tons of welded pipes (+0.56 million tons year on year) in 2023. Production capacity was released, and production increased significantly. The company sells 510,000 tons of seamless pipes (+50,000 tons year on year) and 35,000 tons of welded pipes (+0.6 million tons year on year) throughout the year. At the end of 2023, the company's debt-conversion and fund-raising project was successfully put into operation, and the production and sales rate is expected to continue to grow. From a downstream perspective, the company's gross profit growth this year mainly came from the chemical sector, followed by the machinery sector and the electricity sector. Although gross profit declined in the natural gas sector, gross margin increased sharply. In 2023, the company successfully supplied tubes for ethylene cracking furnaces, and signed a supplier agreement with Saudi Aramco. It is expected that supply will begin this year. Localization substitution and exports are gaining strength in both directions, and the degree of high-end products is expected to increase further.
occurrences
The company publishes the 2023 Annual Report and the First Quarter 2024 Report.
Total revenue in 2023 was RMB 3,516 million, +24.21% YoY, net profit to mother was RMB 352 million, +63.43% YoY. The basic EPS was 0.63 yuan, and the average ROE was 13.07%.
Brief review
Production and sales data have increased, and production capacity has been released.
The company produced 56,000 tons of seamless pipes (+90,000 tons year on year) and 35,000 tons of welded pipes (+0.56 million tons year on year) in 2023. Production capacity was released, and production increased significantly. The company sells 510,000 tons of seamless pipes (+50,000 tons year on year) and 35,000 tons of welded pipes (+0.6 million tons year on year) throughout the year. At the end of 2023, the company's debt-conversion and fund-raising project was successfully put into operation, and the production and sales rate is expected to continue to grow.
Gross profit per ton of sales has risen, and high-end development is prominent.
The company's average sales price of seamless pipes in 2023 was 46,000 yuan/ton (+12% year over year), and gross profit per ton was 7616 yuan (+1,672 yuan year over year). The average sales price of welded pipes was 27,000 yuan/ton (-3% year-on-year), and the gross profit per ton was 4,619 yuan (+607 yuan year-on-year). The degree of high-end products of the company has increased dramatically, increasing the average selling price and gross profit per ton. From a downstream perspective, the company's gross profit growth this year mainly came from the chemical sector, followed by the machinery sector and the electricity sector. Although gross profit declined in the natural gas sector, gross margin increased sharply. In 2023, the company successfully supplied tubes for ethylene cracking furnaces, and signed a supplier agreement with Saudi Aramco. It is expected that supply will begin this year. Localization substitution and exports are gaining strength in both directions, and the degree of high-end products is expected to increase further.
The dividend payment ratio has reached a new high, and the dividend rate is attractive.
The company's dividend payout ratios for 2020-2022 were 49%, 61%, and 71%, respectively, and the share payout ratio has been in a high position for a long time. The company expects to pay out a total of 297 million yuan in cash this year, with a dividend payment ratio of 84.57%, reaching a new high. Based on current stock prices, the dividend rate is as high as 6%, which actively rewards investors.
Profit forecast and investment advice: The company's early price lock order for boiler tubes has been executed, and the price of the new order is expected to rise. In addition, ethylene cracking tubes are expected to be released this year. After obtaining Saudi Aramco's supplier qualification, the company will also participate in Saudi Aramco's tender and is expected to receive orders. The above factors will all contribute positively to the company's sales volume and product price. At the same time, the 20,000 ton seamless pipe project to be invested in bonds will provide sufficient production capacity, and there is plenty of room for growth in the company's performance.
The company's net profit for 2024-2026 is estimated to be $420 million, $49 million, and $640 million, respectively. The corresponding PE is 11.4, 9.8, and 7.5 times, respectively, maintaining a “buy” rating.
Risk analysis: The company's main business is R&D, production and sales of stainless steel pipes, involving domestic and foreign markets. Key engineering fields such as downstream power plant boilers, petrochemicals, nuclear power plants, papermaking, medical devices, and marine vessels are all linked to the macroeconomy to a certain extent and are affected by macroeconomic fluctuations.
Although the company's products have certain technical barriers and the overall application situation is improving, if the global macroeconomic economy continues to decline, it may cause the company to reduce domestic and foreign orders and slow repayment speed, which will have a direct impact on the company's production and operation. The main raw materials of the company's products are stainless steel round steel and stainless steel sheets. Fluctuations in raw material prices directly affect the cost of the company's products, which in turn affects the company's gross profit and net profit level.