The company's net profit to mother increased 25% year over year in 2023. In 2023, we achieved revenue of 110.5 billion yuan (+9.2%), net profit attributable to mother of 527 million yuan (+25.3%), net profit after deducting non-return to mother of 377 million yuan (+105%), and net operating cash flow of -218 billion yuan. 2024Q1's revenue was 24.8 billion yuan (+3.4% YoY, -12.4%), net profit attributable to mother was 109 million yuan (+28.9% YoY, -23.9% YoY), net profit of 112 million yuan (YoY +659%, YoY +40%).
Profits of copper processing products have stabilized. In the face of the overall downturn in the industry, the company achieved a total output of 1.912 million tons of copper and copper alloy materials in 2023, an increase of 9.4% over the previous year. In 2023, the company sold 184,900 tons of copper products used in the fields of new energy vehicles, photovoltaics, wind power, etc., accounting for 9.7%. The profit of the rare earth permanent magnet sector declined. The gross profit of the company's rare earth permanent magnet section was 140 million yuan in 2023, a decrease of 180 million yuan compared to 2022, and the gross margin of rare earth permanent magnet products fell to 12%, mainly due to falling prices of rare earth raw materials in 2023 and increased market competition. The profit of copper processing products stabilized. In 2023, the company's gross profit per unit of copper and copper alloy products (excluding copper wire rows) was 1986 yuan/ton, an increase of nearly 500 yuan/ton over 2022; the gross profit of copper wire rows remained low, and the gross profit per ton in 2023 was only 471 yuan.
Optimize the industrial layout and export production capacity overseas. In 2023, the company sold 140,900 tons of copper products such as copper pipes, electromagnetic wires, copper strips, etc., an increase of 19.22% over the previous year. The company expanded the joint advantages of the company's overseas bases by building a new production base in Thailand and expanding the scale of production lines at the Vietnamese base. During the reporting period, the company's “precision copper tube production project with an annual output of 80,000 tons in Thailand” progressed smoothly; planning for Vietnam's flat wire project and copper pipe fittings project has already begun.
Risk warning: Demand in incremental markets such as new energy vehicles falls short of expected risks; there is a risk that the price of copper or rare earth raw materials will fluctuate drastically; there is a risk that product gross margin will decline due to intense market competition.
Investment advice: Maintaining an “Overweight” rating
Referring to the price trend of major non-ferrous metals since the beginning of the year, assuming that the price of copper is 75,000 yuan/ton in 2024/2026, the company's revenue is expected to be 1461/1502/154.2 billion yuan respectively, a year-on-year growth rate of 32.2/2.8/ 2.7%, and net profit to mother is 6.11/7.01/791 billion yuan, respectively, a year-on-year growth rate of 15.9/14.8/ 12.9% EPS, and 0.41/0.54 yuan respectively. The current stock price corresponds to PE multiples 16.2/14./12.5, respectively. On the basis of making full use of domestic production capacity, the company will further lay out production capacity in Southeast Asia in the future, fully benefiting from the increasing demand for copper and rare earth permanent magnet materials in the new energy market, and maintaining an “increase” rating.