Incident: The company disclosed its 2024 quarterly report, achieving operating income of 267 million yuan, an increase of 18.99%; net profit to mother of 24.8.063 million yuan, an increase of 8.22% year on year; after deducting non-net profit of 22.1334 million yuan, an increase of 9.61% year on year. The company disclosed its 2023 annual report, achieving operating income of 947 million yuan, a year-on-year increase of 15.25%; net profit to mother of 659.17,700 yuan, a year-on-year decrease of 43.49%; deducted non-net profit of 53.296 million yuan, a year-on-year decrease of 43.33%. The review is as follows:
There was a steady increase in 24Q1 performance, and gross margin increased slightly. Q1 The company's gross margin/net margin was 20.72/9.29%, with year-on-year changes of +0.98/-0.93pct. The company's net operating cash flow was -298.262 million yuan, which changed from positive to negative over the previous year, mainly due to an increase in accounts receivable in the current period. The company's expense ratio for the period was 10.43%, an increase of 1.39 pct over the previous year. Among them, the sales/management (including R&D) /finance expense ratios were 3.75/5.08/ 1.61%, respectively, with year-on-year changes of +0.43/-0.71/+1.68pct, mainly due to increased sales staff, increased travel and market development expenses, and interest on convertible bonds.
Due to multiple disruptions, full-year results were temporarily under pressure. In 2023, the prices of the company's main raw materials, borax and boric acid, increased dramatically, and the prices of electricity and natural gas were also at a high level. The sharp increase in interest expenses due to the issuance of convertible bonds by the superposition company and the increase in expenses due to the ignition of multiple new kilns have temporarily put pressure on the company's performance. Among them, Q4's revenue was 256 million yuan, up 1.29% year on year; net profit to mother was 12.276 million yuan, down 59.13% year on year; after deducting non-net profit of 1.09 million yuan, down 58.05% year on year. 1) The main products continue to gain strength, and the overseas market is growing. By product, in 2023, the company's revenue of heat-resistant glass/ medicinal glass was 518/406 million yuan respectively, up 24.86/ 15.27% year on year; sales volume of heat-resistant glass/medicinal glass increased 25.86/ 19.56% year on year, respectively. By region, domestic/overseas revenue was 762/185 million yuan respectively, up 15.78/ 13.11% year-on-year respectively.
2) Gross profit margin declined year over year. Affected by the rise in raw fuel prices, the company's gross margin/net margin was 17.44/ 6.96%, respectively, down 4.65/7.23pct from the previous year. Among them, the gross margin of heat-resistant glass/medicinal glass was 13.13/ 23.19% respectively, a year-on-year decrease of 6.86/1.63 pct. 3) Cash flow has improved significantly, and expense ratios have increased. In 2023, the company's net operating cash flow was 61.3908 million yuan, an increase of 32.35% over the previous year, mainly due to an increase in revenue for the current period and an increase in cash received from selling goods and providing services. The company's expenses rate for the period was 10.83%, an increase of 2.57 pct over the previous year. Among them, the sales/management (including R&D) /finance expense ratios were 4.17/6.16/ 0.51%, respectively, with a year-on-year change of +1.07/-0.01/+1.53pct.
The increase in sales expenses was mainly due to the increase in expenses due to the expansion of the company's business scale in the current period; the increase in financial expenses was mainly due to the increase in interest expenses on convertible bonds issued in the current period.
The borosilicate molded bottle has successfully moved to “A”, and production capacity is about to be released. On April 30, the company issued an announcement. The 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 registration information disclosure platform for active ingredients, pharmaceutical excipients and pharmaceutical packaging materials. The company has a long-term production capacity of 630,000 tons of borosilicate molded bottles. After switching to “A”, the products can be officially sold in batches, and future performance can be expected.
Investment advice: Revenue growth is steady, borosilicate molded bottles are about to be released, and the holding rating is maintained. The company's net profit from 2024 to 2026 is estimated to be 1.59, 2.13, and 267 million yuan, respectively, up 142%, 33%, and 26% year-on-year, respectively, and corresponding valuations are 24, 18, and 14 times, respectively. Daily-use glass is the company's traditional dominant sector. The industry has changed from rapid development to a stage of high-quality development, and leading enterprises have benefited even more. The market size of the pharmaceutical glass industry is showing an increasing trend. Borosilicate glass benefits from consistent evaluation policies, and the penetration rate will increase rapidly. As the company expands its borosilicate control bottles, it is also actively entering the borosilicate molded bottle market with a better market pattern, and the future is full of growth.
Risk warning: Risks that fund-raising projects fall short of expectations; risk of rising raw materials; risk of falling overseas demand; risk of increased market competition, etc.