Net profit after deduction in 2023 fell 49.82% year on year, and the company plans to distribute a total cash dividend of 27.609 million yuan (tax included). In 2023, the company achieved operating income of 5.457 billion yuan, a year-on-year increase of 8.55%, net profit to mother of 82.7236 million yuan, a year-on-year decrease of 63.66%, and net profit after deduction of 108 million yuan, a year-on-year decrease of 49.82%. The decline in the company's performance in 2023 is mainly due to the recovery in global terminal consumer demand falling short of expectations, worsening supply and demand balance, and intensifying competition, leading to a narrowing of the price spread of the company's main products and short-term pressure on profitability. In 2023, the company plans to distribute a cash dividend of 1.50 yuan (tax included) to all shareholders for every 10 shares, for a total of 27.609 million yuan (tax included), accounting for 33.37% of net profit returned to mother in 2023.
Net profit after deducting 2024Q1 increased 142.37% month-on-month, reversing year-on-year losses. In the first quarter of 2024, the company achieved operating income of 1,319 billion yuan, a year-on-month decrease of 7.35%, a year-on-year increase of 11.90%, and net profit to mother of 51.23%, a year-on-month increase of 51.23%. After deducting net profit of 34.1123 million yuan, a month-on-month increase of 142.37%, reversing the year-on-year loss. The company's profit growth in the first quarter of 2024 was mainly due to an improvement in the macro environment, the absorption of the company's production capacity, and a year-on-year increase in operating income and gross margin; on the other hand, the amount of government subsidies received by the company also increased significantly year-on-year.
BOPP film line production capacity was steadily released, and new projects contributed to performance. The company built four BOPP film lines, and the second, third and fourth production lines were put into operation in 2022, and production capacity was steadily released in 2023. The company achieved OPP film sales of 706 million yuan, an increase of 36.82% over the previous year, and the sales growth rate was low due to structural changes in the main film-based tape and falling raw material prices (film-based tape is mainly composed of OPP tape and PVC tape. The unit price of OPP tape is low, the share is gradually rising. The price of raw materials has declined, leading to a gradual reduction in the unit price of film-based tape). The company's “Yong22 Bond Transfer” fundraising project “Wire Harness, Medical Tape Production and Research Integration and Manufacturing Base Construction Project” reached the scheduled state of use in March 2023. In 2023, the company's wire harness tape achieved operating income of 62.4644 million yuan, an increase of 47.87% over the previous year, and a gross profit margin of 16.23%, an increase of 5.69 pcts over the previous year.
Lay out environmentally friendly and special tape to replace domestic production. In order to further enhance the company's growth momentum and share the demand dividends of domestic substitution in the field of industrial tape, the company gave full play to the advantages of R&D capabilities and customer resources, expanded externally, and laid out fields such as new environmentally friendly and degradable materials and automotive functional adhesives. The company's “Jiangxi Zhenguan Environmentally Degradable New Materials Industry-Research Integrated Construction Project” is expected to complete the first phase of construction in the first half of 2024 and reach the intended state of use. The “Jiangxi Lianguan Functional Adhesive Film Material Industry-Research Integrated Construction Project” is expected to complete all construction by the end of 2024 and reach the intended state of use.
Profit forecast. Due to the drop in the prices of the company's main products, we lowered our profit forecast for the company. We expect the company's net profit for 2024-2026 to be 1.59 (-66.6%), 1.82 (increase), and 2.10 billion yuan (increase), respectively, with corresponding EPS of 0.83, 0.95, and 1.10 yuan, respectively. Referring to the valuation of comparable companies in the same industry, 22.5 times PE was given in 24 years, and the corresponding target price was 18.68 yuan (-36.16%), maintaining a rating superior to that of the market.
Risk warning. Product prices fluctuate, raw material prices fluctuate, and downstream demand falls short of expectations.