Event: Total operating income of 4.982 billion yuan (+18.98%); net profit to mother of 776 million yuan (+25.48%); net profit after deducting non-return to mother of 742 million yuan (+23.07%) was achieved in 2023. In 2024, the company achieved operating income of 1,267 billion yuan (+2.5%), net profit to mother of 220 million yuan (+32.59%), and net profit of 210 million yuan (+36.14%) after deducting non-attributable net profit in Q1. The 2023 dividend plan is to pay cash of $4.00 for every 10 shares, and a total cash dividend of $270 million is to be distributed.
Borosilicate continues to grow, and overseas markets are recovering rapidly. In 2023, the molded bottle series revenue was 2.64 billion yuan (+29.36%), ampoule revenue was 0.73 billion yuan (+24.42%), control bottle revenue was 205 million yuan (+18.05%), brown bottle revenue was 1,118 million yuan (+29.10%), butyl rubber stopper series revenue was 256 million yuan (+12.66), aluminum-plastic cap plastic bottle revenue was 56 million yuan (-2.69%); commercial revenue was 384 million yuan (-4.50%). At home and abroad, domestic revenue was 3,577 billion yuan (+17.08%), and foreign revenue was 1,360 billion yuan (+26.44%), mainly due to increased export revenue from brown bottles and nanocalcium. Revenue of 1,267 billion yuan (+2.5%) was achieved in Q1 2024 in a single quarter, mainly due to rapid growth in sales of brown bottles and medium borosilicate molded bottles.
Costs have continued to fall, and gross margins have increased. In 2023, the company achieved a gross profit margin of 28.03% (+1.19pp), with a gross margin of 39.17% (-0.6pp) of molded bottle series, 5.66% (-1.95pp) of ampoules, -1.72% (-11.17pp), brown bottle series gross margin of 23.78% (+3.04pp), butyl rubber stopper series gross margin of 24.55% (+8.27pp), and 35.02% (+3.92pp) of aluminum-plastic cap plastic bottle series. On the one hand, the increase in the company's gross margin is due to the increase in the proportion of the company's high-margin products. It is estimated that 1.4 billion borosilicate molded bottles will be sold in 2024. On the other hand, the cost of soda ash has declined, falling sharply year on year, and costs are expected to improve further.
Employee incentives are in place, and management costs have increased. The previous incentive plan was an incentive fund that could be withdrawn based on 25% of the net profit increase in the previous year when the net profit growth rate reached 6% in the previous year. In addition, the company announced the leadership team's remuneration incentive plan. When profit growth rates reach 1-10%, 10-20%, 20-30%, and 30%, respectively, profit commissions of 0.6%, 0.8%, 1%, and 1.2% are calculated according to the total profit growth amount, respectively.
In 2023, the company's management expenses were 188 million yuan (+30.44%), and the management expense ratio of 3.77% (+0.33pp) was mainly due to profit growth rewards accrued in the current period. Management expenses increased 163.25% year-on-year in the Q4 quarter of 2023, mainly because the management profit commission of 20 million was included in management expenses. The Q1 management expense ratio for 2024 was 4.37% (+1.32pp). Mainly, excess profit expenses of 17 million were included in management expenses.
Profit forecasting and investment advice. The company's net profit due to mother in 2024-2026 is estimated to be 1 billion yuan, 1.25 billion yuan, and 1.52 billion yuan, corresponding PE is 19, 15, and 12 times, respectively. It is recommended to keep an eye on it.
Risk warning: Risks such as cost control falling short of expectations, core product sales falling short of expectations, and overseas business expansion falling short of expectations.