The company released its 2023 annual report and 2024 quarterly report
2024Q1 achieved revenue of 270 million yuan, +19% year on year, net profit of 0.2 billion yuan, +8.2% year on year; achieved revenue of 950 million yuan, +15.3% year on year, net profit of 70 million yuan, 43.5% year on year; of these, 23Q4 revenue was 260 million, +1.3% year over year, and net profit to mother was 0.1 billion, or -59.1% year over year.
Revenue from heat-resistant glass recovered, and medicinal glass grew steadily
In '23, the company's heat-resistant glass revenue was 520 million, +24.9% year on year, gross profit margin 13.1%, year on year -6.9pct; pharmaceutical glass revenue was 4.1 billion, +15.3% year on year, gross profit margin of 23.2%, -1.6 pct year on year.
In terms of heat-resistant glass, the downstream are mainly internationally renowned companies such as Lok & Lock, Shuangliren, and Corning. The company has excellent customer resources and is the world's leading company in high borosilicate heat-resistant glass. In addition to traditional products, the company continues to enrich product categories, focusing on developing high-value-added products, and gradually promoting product transformation; overseas demand gradually recovered, and the cost of major raw materials began to stabilize and fall, which is conducive to the recovery of the company's heat-resistant glass business.
In terms of medicinal glass, the company rapidly expanded the production capacity of borosilicate pharmaceutical glass, quickly seized the borosilicate pharmaceutical glass market, and achieved remarkable results. In the field of control bottle production, the company has also mastered the production technology of low borosilicate pharmaceutical glass tubes and medium borosilicate pharmaceutical glass tubes. The commissioning of the borosilicate tube project enabled the company to form an advantage in the entire industry chain from tube drawing to bottle making, which is conducive to further reducing product costs and enhancing market competitiveness.
Raw material energy prices rose in '23, and profitability is expected to recover in '23 with a gross profit margin of 17.4%, year-on-year -4.7 pct, net profit margin of 7.0% year on year, and -7.2pct year on year. The decline in profitability is mainly due to: 1) Prices of the company's raw materials borax and boric acid increased dramatically in '23, and the prices of electricity and natural gas required for production were also at a high level, leading to a significant increase in interest costs; 3) With the recovery of market-side kilns, the company set fire to many kilns. incur the corresponding fees.
As the qualification rate for new kilns climbed in '24, the company's costs continued to decline; in addition, overseas demand gradually recovered, and the cost of major raw materials began to stabilize and fall, which is conducive to the recovery of the company's heat-resistant glass business. We expect the profit level to recover.
The borosilicate molded bottle has been converted to A, and I am optimistic about medium term volume growth
The company's borosilicate glass molded injection bottles recently passed the CDE technical review, and the registration number has changed to “A” status on the CDE API, pharmaceutical excipients and pharmaceutical packaging materials registration information disclosure platform, indicating that the borosilicate glass molded injection bottles produced by the company can be officially sold in batches.
This transfer to A responds to the national consistency evaluation policy, can better meet the growing demand of downstream customers for borosilicate molded bottles, further expand the company's market share in the pharmaceutical packaging field, and contribute to the company's business performance to a certain extent, which is conducive to the achievement of the company's strategic goals.
Adjust profit forecasts to maintain “buy” ratings
In terms of daily-use glass, the company continues to upgrade its product structure and is expected to optimize profits; in terms of medicinal glass, the consistent evaluation policy and national drug volume procurement policy promote a rapid increase in the penetration rate of borosilicate pharmaceutical glass. The company's borosilicate molded bottle transfer A and fund-raising projects are expected to open up room for growth. We have adjusted our profit forecast. The net profit for 24-26 is expected to be 1.7/2.2/280 million (the previous value was 1.3/170 million for 24-25 years), corresponding to PE of 24/19/15X, maintaining a “buy” rating.
Risk warning: price fluctuations of major raw materials, risk of exchange rate fluctuations, risk of investment project commissioning progress or falling short of expectations