Incident: The company released its 23 annual report and 24Q1 quarterly report, achieving revenue of 5.649 billion yuan, +19.69% year over year, and a return of 390 million yuan, +52.15% year over year; of these, Q4 achieved revenue of 1,561 billion yuan in a single quarter, +57.52% year over year, or 93 million yuan for the same period last year. 24Q1 achieved revenue of 1,493 million yuan, +21.04% year over year, and contributed 82 million yuan to mother, +5.55% year over year.
Comment: Exceeded the 23-year business target, sales of refractory materials increased significantly, or further increased market share. According to the 22-year report, the company's operating target for 23 years was to achieve revenue of 5.191 billion yuan and a return of 282 million yuan, which actually exceeded 8.82% and 38.30%, respectively, and continued high-quality growth in 24Q1.
In terms of product sales, the company sold 801,900 tons of refractory materials in 23 years, +14.83% year-on-year. The refractory industry has been stable overall in 23 years. Sales prices have continued to decline due to downstream steel prices, and industry competition is still fierce. Therefore, we expect the company's market share to increase further with the advantages of the entire industry chain.
Steadily promote the transformation to a “comprehensive integrated supplier for the steel industry”. The company's overall contract for refractory materials and direct sales of refractory materials reached 37.17/510 billion yuan respectively, +16.95%/-13.45% year-on-year. The “overall contract” model pioneered by the company already has a very high penetration rate in the domestic steel industry, which is conducive to improving customer stickiness and showing “moat” properties. Other direct sales businesses achieved revenue of 1,422 billion yuan, with revenue accounting for +5pct to 25.17% year over year. The company has now achieved technological leadership in the field of key refractory materials for high-end stainless steel, and has been highly recognized by customers such as TISCO and Qingtuo. At the same time, it has accumulated rich technical and production experience in molybdenum alloy products, and will continue to enrich the product structure.
Profitability has increased due to cost reduction and efficiency, and the cost ratio is relatively stable. The company's gross margin/net margin in '23 was 18.37%/7.03%, +1.27/+1.50pct year on year, with internal cost reduction and raw material price reduction, and gross margin of refractory materials +2.87pct year on year; in addition, 24Q1 company's gross margin/ net margin was 15.78%/5.63%, -4.03/-0.52 pct year on year. In terms of cost ratio, the 23-year sales/management/R&D/finance expense ratio was 1.63%/3.50%/3.64%/0.02%, overall -1.04pct; 24Q1 sales/management/R&D/finance cost ratio was 2.07%/2.85%/4.27%/0.03%.
Continue to promote the improvement of the “whole industry chain”, and have stable business goals for 24 years. The company will continue to increase investment in the raw materials sector in 24 years. It plans to add production lines for composite fused materials, zirconium raw materials, etc., expand the high-end raw material product line, optimize the product structure, and increase the proportion of high-value-added products. The 24-year business goals are:
We aim to achieve annual revenue of 6.214 billion yuan and net profit of 429 million yuan.
Investment advice: We expect the company to achieve net profit of 441/5.02/575 million yuan in 24-26, corresponding to EPS of 0.37/0.42/0.48 yuan, maintaining the company's “buy” rating.
Risk warning: Downstream recovery falls short of expectations, large fluctuations in raw material prices, and risk of bad debts in accounts receivable.