Incident: The company released the 2023 report & 2024 quarterly report. In 2023, it achieved revenue of 2.33 billion yuan, -3.2% year-on-year, and realized net profit of 610 million yuan, +4.3% year-on-year, after deducting net profit of 550 million yuan without return to mother, +9.1% year-on-year. The first quarter of 2024 achieved revenue of 440 million yuan, +67% year-on-year, and realized net profit of 120 million yuan, +116.3% year-on-year, net profit of 110 million yuan after deducting non-attributable net profit of 110 million yuan, +196.9% year-on-year.
The pace of pitching led to 23 years of low and high results. On a quarterly basis, revenue for Q1/Q2/Q3/Q4 in 2023 was 2.6/4.5/6.7/9.5 billion yuan (-47.9%/-8.7%/+32.5%/+4.6%), and net profit to mother was 0.6/0.9/1.8/290 million yuan (-46.6%/-24.8%/+42.4%/+20.3%), respectively. The company's pulping volume in 2022 was affected by the external environment, so the company was low and high before and after delivery in 2023. The 24Q1 performance growth rate was high, mainly due to the low base for the same period last year.
In 2023, the company's sales expenses rate declined, and profit margins increased year-on-year. In terms of profitability, the 2023 company's gross sales margin was 51.5% (-0.7pp), mainly due to last year's high Q4 base and the loss of revenue from 23H1's insufficient investment. The annual sales expense ratio was 12.3%, 4.4pp year on year. The main reason is expected to be strong market demand and sales policy adjustments for some varieties. The management cost rate was 7.7%, +0.9pp year on year, and the R&D cost ratio was 3.4%, +0.3pp year on year. Combining the above factors, the company's annual net interest rate was 26.3%, +1.9pp year-on-year.
Heilongjiang pulp stations have been launched one after another, and the company reached an inflection point in pulp volume growth. In April 2024, the company announced that the Pasfique Single Pulping Station in Yi'an County had obtained a pulping license. Since August 2022, 8 new pulp stations have been approved for mining by Pacifico. The company's pulping volume will exceed 1,200 tons in 2023. It is expected that with the rapid commissioning of Pasfique's new pulp station, the company's slurry volume is expected to accelerate in 2024.
Profit forecast and investment advice: The company's net profit for 2024-2026 is estimated at 780 million yuan, 890 million yuan, and 1.02 billion yuan, with corresponding valuations of 28 times, 25 times, and 21 times, respectively. Maintaining a “buy” rating, considering that the company's future performance will grow rapidly.
Risk warning: risk of increased competition; risk of rising costs; risk of product sales falling short of expectations; policy risk.