Key points of investment:
The company released its 2023 annual report and 2024 quarterly report, and the performance was in line with market expectations. In 2023, the company achieved revenue of 8.568 billion yuan, up 31.07% year on year, and achieved net profit of 1,489 million yuan, up 15.58% year on year; 23Q4 achieved net profit from mother of 381 million yuan, down 7.23% year on year and 3.79% month on month; 24Q1 achieved net profit to mother of 328 million yuan, up 40.95% year on year and 13.8% month on month.
Sales of stainless steel pipes grew steadily, and the gross profit level per ton remained high. In 2023, the company achieved sales of 61,400 tons of seamless pipes, a year-on-year increase of 14.82%, a tonne price of about 65,509 yuan/ton, a year-on-year increase of 8.6%, a year-on-year increase of 14.42%, and gross profit of about 18,580 yuan/ton, a year-on-year decrease of 3.76%. At the same time, the company achieved sales of 65,000 tons of welded pipes, a year-on-year increase of 6.72%, and a ton gross profit of about 26,478 yuan/ton, an increase of 1.44%. 8,749 yuan/ton, up 13.51% year-on-year. Overall, thanks to the high-tech barriers in the high-end stainless steel pipe industry, the company's seamless pipe and welded pipe businesses have maintained a high level of gross profit.
Expenses increased year-on-year during the period, and R&D investment remained at a high level. In 2023, the company's total expenses for the period amounted to 1,029 billion yuan, an increase of 29.87% over the previous year. Among them, management expenses were 367 million yuan, an increase of 66.14% year on year, mainly due to the new management expenses of Jiuli Europe; sales expenses of 364 million yuan, up 27.32% year on year; financial expenses -0.42 million yuan, a year-on-year decrease of 23 million yuan, mainly due to the increase in monetary capital and deposit interest income in the current period; in addition, R&D expenses were 339 million yuan, an increase of 11.54% year on year, maintaining a high level.
By acquiring high-quality overseas assets, the composite pipe business is expected to contribute to increased performance. According to the company's announcement, during the reporting period, the company successfully acquired German company EBK and its composite pipe production capacity was expanded; at the same time, in September 2023, the subsidiary EBK signed a contract with Abu Dhabi National Petroleum Company to supply pipeline steel pipes with a total length of about 92 kilometers. The total contract price (tax included) was about 592 million euros (converted to about 4.6 billion yuan), and the contract construction period was from the date the contract was signed to September 2025. As this contract order is delivered one after another, the company's performance is expected to grow further.
Investment analysis: During the 14th Five-Year Plan period, the main downstream demand for stainless steel pipes such as oil, gas, electricity, etc. is expected to continue to grow, adding the company's 2024-2025 net profit forecast to 1,468 billion yuan and 1,682 billion yuan (the original forecasts were 1,452 billion yuan and 1,587 billion yuan, respectively), and added the 2026 net profit forecast of 1,895 billion yuan, corresponding to PE 17 times, 14 times, and 13 times respectively, maintaining the “buy” rating.
Risk warning: Prices of raw materials have risen sharply, affecting product sales; downstream demand falls short of expectations.