Description of the event
Enjie Co., Ltd. released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 12.042 billion yuan, a year-on-year decrease of 4.36%, net profit to mother of 2,527 billion yuan, a year-on-year decrease of 36.84%, after deducting non-net profit of 2,461 billion yuan, a year-on-year decrease of 35.90%. Among them, 2023Q4 achieved revenue of 2,949 billion yuan, a year-on-year decrease of 10.95%, net profit of 373 million yuan, a year-on-year decrease of 51.82%, after deducting non-net profit of 407 million yuan, a year-on-year decrease of 44.04%. 2024Q1 achieved revenue of 2,328 billion yuan, a year-on-year decrease of 9.38%, net profit to mother of 158 million yuan, a year-on-year decrease of 75.64%, after deducting non-net profit of 149 million yuan, a year-on-year decrease of 76.25%.
Incident comments
Looking at the full year of 2023, the company's diaphragm shipments increased slightly year-on-year; membrane business revenue was 10.76 billion yuan, which is estimated to have declined month-on-month; the gross margin of the membrane business was 38.2%, down 12.2pct year on year, corresponding to a further year-on-year decline in single flat gross profit. The price decline and narrowing of the single flat margin were mainly due to the company actively cutting prices to seize market share. Ultimately, the company's net profit narrowed. However, the company's overseas business continues to expand, with direct export revenue of 2.02 billion yuan, an increase of 51.5% over the previous year. Considering the domestic support of overseas customers, the share of overseas customers is expected to increase. After the split into the fourth quarter, the company expects shipments to decline month-on-month; in terms of profit, single-flat gross profit declined month-on-month; single-flat expenses were basically flat month-on-month, and ultimately, single-flat profits continued to decline month-on-month.
Looking at 24Q1, the company expects shipments to be basically flat month-on-month; in terms of profitability, simple gross profit continues to decline month-on-month. On the one hand, it is affected by domestic price competition, and on the other hand, it is related to insufficient expected operating rates. It is estimated that the cost of a single flat has increased month-on-month, and the profit of a single flat rate is estimated to be marginal. However, considering the impact of the company's Q1 bonus calculation, the net profit of single flat increased after exclusion, but it still declined month-on-month. In addition, the company accrued asset impairment of $0.7 billion.
Looking ahead, the company's shipping structure continues to be optimized, considering overseas customer expansion and base expansion. Among them, the Hungarian base completed certification and mass production by the end of the year, and the pace of landing at the US base is accelerating. The overseas share is expected to gradually rise this year, supporting shipments and profits. Furthermore, the company relies on large-scale advantages, differentiated cost reduction in online coating, and continuous R&D investment and technical reserves to maintain its comparative profit and leading position in the industry. Keep recommending.
Risk warning
1. The risk of a downturn in industry sentiment;
2. The risk that profitability falls short of expectations due to increased competition in the industry.