Key points of investment:
Net profit attributable to mother in '23 was +117.37% YoY, and 24Q1 net profit was +34.47% YoY. In 2023, the company achieved revenue of 10.422 billion yuan, +13.03% year on year; realized net profit attributable to mother of 1,396 billion yuan, +89.29% year over year; realized deducted non-net profit of 1,178 billion yuan, +117.37% year over year. With 2023Q4, the company achieved revenue of 2,552 billion yuan, +5.65% year on year; realized net profit of 339 million yuan, +26.70% year on year; realized deducted non-net profit of 287 million yuan, +31.96% year over year. With 2024Q1, the company achieved revenue of 2,385 million yuan, -2.93% year over year; realized net profit of 294 million yuan, +26.92% year over year; realized deducted non-net profit of 242 million yuan, +34.47% year over year. The company plans to distribute a total cash dividend of 536 million yuan (tax included) in 2023, and the total cash dividend accounts for 38.39% of net profit due to mother in 2023.
The 23-year performance achieved significant growth, mainly benefiting from the following factors: 1. Since 2023, domestic economic activity, transportation and logistics have resumed normalization, automobile production and sales have increased, and foreign trade demand has continued to be strong, and sales of the company's tire products have increased significantly. 2. Under the recovery and growth of market demand and strong support from the company's brand, product prices remained stable. 3. Market prices of the main raw materials for tires fluctuated and declined, falling year on year, and cost pressure eased. 4. The profitability of tire products has increased, commercial vehicle tires and passenger car tires have increased profits, and high-value-added products such as engineering radial tires and giant tires have maintained a high level of profitability, with outstanding profit contributions.
The company realizes innovation in new technology, new materials, and new processes. In 2023, through R&D, innovation and application of new designs, new materials and new processes, the company has greatly improved product performance, improved development efficiency, and reduced energy consumption. In terms of passenger tire profile prediction, high-precision prediction has been achieved, eliminating reliance on experience; the application ratio and scope of high-strength steel wires and steel wire cords such as ST and UT have been greatly increased in commercial vehicle tires and passenger tire design and development, product performance has been significantly improved, and product weight and energy consumption have been effectively reduced; new vulcanization processes have been adopted to reduce the energy consumption level of commercial vehicle tires and radial engineering tires; the application of new materials in engineering tires has increased the average service life of tires by more than 10%; a complete development technology for silent cotton tires has been formed and mass production conditions are available.
The company promotes brand building. In 2023, the company continued to launch high-speed rail advertisements. A special train for the Hangzhou Asian Games was launched. Advertisements at six high-speed rail stations, including Hangzhou East Railway Station, Hangzhou South Railway Station, and Hangzhou Railway Station, further extended the brand communication of triangle tires; helped the German Triangle Schwerin sailing team to sail the 20er Jollenkreuzer class yacht race; titled “Triangle Tire Cup” 2023 China? The Weihai Super Triathlon Series continues to enhance the influence of the “Triangle” brand; further expand regional markets and terminal channels for sub-brands such as “Powerstone”, “DIAMONDBACK” and “SAPPHIRE” at home and abroad; participate in the 133rd and 134th China Import and Export Fair, the United States, Italy, Germany, the Middle East, Latin America and other countries or regions, as well as international and domestic exhibitions such as the Latakko Conference and the International Rubber Conference. The products received widespread attention and customers. Favourite.
Profit forecast. We expect the company's net profit to be 1,474 billion yuan, 16.22, and 1,982 billion yuan in 2024-2026, respectively. Referring to the valuation of comparable companies in the same industry, we believe that the reasonable valuation is 11-12 times PE in 2024, corresponding to a reasonable value range of 20.24-22.08 yuan, maintaining the “superior to the market” rating.
Risk warning. Trade frictions; escalation of international trade and technical barriers; large fluctuations in raw material prices.