Incidents:
The company's borosilicate glass molded injection bottle recently passed the technical review by the Drug Evaluation Center (CDE) of the State Drug Administration, and the registration number has changed to “A” status on the CDE API, pharmaceutical excipients and pharmaceutical packaging materials registration information disclosure platform.
Comment:
The company's boron molded bottle products are expected to contribute significantly to incremental performance in the future. The company's borosilicate glass molded injection bottles indicate that the borosilicate glass molded injection bottles produced by the company can be officially sold in batches after the relevant formulations are approved (converted to “A” status). Borosilicate pharmaceutical glass will gradually become the mainstream of medicinal glass due to its better product performance. The company's borosilicate molded bottle production capacity is 0.5/58,000 tons, and the new production capacity is expected to gradually reach significant incremental performance after delivery.
The company's sales volume of medicinal glass/heat-resistant glass grew steadily in 2023. In 2023, the company achieved sales of 3.37 billion units of medicinal glass +20%, revenue of 400 million yuan +15%, unit price 0.12 yuan/branch ratio -4%, gross profit margin 13.1% yoy -6.9pct; heat-resistant glass achieved sales of 58,000 tons +26% YoY, revenue of 520,000 yuan +25% YoY, unit price 0.90 yuan/ton -21%, gross profit margin of 23.2% yoy -1.6 pct. By region, domestic/overseas revenue in 2023 was 76/190 million yuan, +16%/13% year on year, achieving gross profit margin of 15.6%/25.2%, respectively, and -6.1 pct/+1.4pct year on year.
Profit margins for 2023, 2024Q1 recovered slightly. The company's current profit in 2023 was pressured by factors such as higher raw material and energy prices, increased interest costs for issuing convertible bonds, and the cost of new ignition kilns. The gross profit margin for the whole year was 17.4% yoy -4.7pct, and the net profit margin was 7.0% yoy -7.2pct; 2024Q1 sales gross margin/net margin was 20.7%/9.3%, respectively, +3.3pct/+2.2pct compared to the full year of 2023.
Maintain an “Overweight” rating. Considering that the company's profitability is still under pressure due to factors such as raw materials, the sales and production capacity of borosilicate products will take a certain period of time to lower the profit forecast. Net profit from 2024 to 2026 is estimated to be 1.4/2.0/ 270 million yuan (2024/2025 forecast value is 26/330 million yuan), +116%/43%/33% YoY, corresponding PE is 29/20/15 times.
Risk warning: downstream demand falls short of expectations, raw fuel prices fluctuate, and the company's performance falls short of expectations