The company achieved net profit of 775 million yuan in 2023, +37.05% year on year; 24Q1 achieved operating income of 3,551 million yuan, +5.95% year over year, and realized net profit of 279 million yuan, +32.68% year over year. The company's performance exceeded expectations. The competitive pattern of the industry has been optimized, and the leading advantage continues to improve; in terms of new energy, metal packaging technology is applied to the new energy sector to develop a second growth curve; in terms of deep processing, the company has formed a demonstration effect on customers by launching its own brand. The latter two are expected to become new profit growth points for the company.
Revenue rebounded steadily in 24Q1, and profitability increased significantly. In 2023, the company achieved operating income of 13.843 billion yuan, -1.59% year-on-year, and realized net profit attributable to shareholders of 775 million yuan, +37.05% year-on-year, and net profit of 746 million yuan after deducting net income from mother, +62.27% year-on-year. 2024Q1 achieved operating income of 3,551 billion yuan, +5.95% year over year, and realized net profit of 279 million yuan, or +32.68% year over year. After deducting non-recurring profit and loss, net profit attributable to mother for the single quarter was $265 million, +28.44% year-on-year. The company plans to distribute a cash dividend of 1.20 yuan for every 10 shares, for a total of 307 million yuan, with a dividend ratio of 39.70%. The company's three-piece can business maintained steady growth. Among them, innovative products performed well and were favored by the market. The sales volume of the two-piece can business increased year-on-year, and the profit level improved over the same period.
Gross margin and net profit margin both increased, and expenses were well controlled during the period. In 2023, the company achieved a gross profit margin of 15.24%, a year-on-year +3.38pct, and a net profit margin of 5.34%, and +1.39pct year-on-year. The cost rate for the 2023 period was 7.97%, +0.42pct. Among them, the financial cost rate/management expense rate/sales expense rate/R&D expense ratio were 1.91%/4.07%/1.67%/0.32%, respectively, and -0.09pct/0.21pct/0.30pct/ 0.01pct year over year.
2024Q1 achieved a gross profit margin of 18.26%, +3.41pct year on year, and a net profit margin of 7.78%, +1.60pct year on year. The 2024Q1 company's cost rate for the period was 7.69%, +0.49pct year-on-year. The increase in the company's gross margin and net profit was mainly affected by the decline in raw material prices and the increase in sales of three-piece cans. The cost ratio increased steadily during the period, mainly due to an increase in investment in new energy battery cases and its own brand business.
The competitive pattern of the industry has been optimized, and the leading advantage continues to improve. The metal packaging industry has entered a mature period, and mergers and acquisitions are expected to be further strengthened, industry capital expenditure will decline, and product prices and cash flow are expected to continue to improve.
Earlier, the company successfully completed mergers and acquisitions of Bohr's Asia Pacific business, enabling the company to respond more efficiently to customer order needs. The company plans to acquire COFCO Packaging. If the acquisition is successful, the market share of two-piece cans and three-piece cans is expected to increase further, and the company's scale effect will be further strengthened. The metal packaging industry continues to be integrated into mergers and acquisitions, and the threshold for new entrants is high. Orekin's concentration as a leading company and voice in the industry chain continues to increase, which will also raise the company's future profit level.
In terms of new energy, metal packaging technology was applied to the field of new energy, and the second growth curve was developed. The company cooperated with Weilan New Energy to build a new energy battery precision structural parts production line project in Zaozhuang, Shandong. It has built a production line with mass production capacity for new energy battery case structural parts and provides batch test products for intended customers. The company applies process technology on metal packaging to batteries, which is conducive to improving safety and reducing costs. If the proofing is successful and the model is replicated, it is expected to become the company's second growth curve in the next year or two.
In terms of deep processing, the company has formed an exemplary role for customers by launching its own brand. Through the model of independent research and development and cooperation with well-known companies, the company has launched a series of private brand products such as “Xiwang” sports nutrition drink, “Le K” craft beer, and “Yuanben Shanliang” prepared dishes to the market, and has continuously enriched the product categories. Currently, it is being sold simultaneously online and offline. The company provides downstream customers with more service solutions, and at the same time attracts more well-known brands, and has begun to use Orekin's integrated aluminum cans, shell cans, and bowls. The production volume of new products is growing rapidly.
Maintain a “Highly Recommended” investment rating. As a leading metal packaging enterprise, the company continues to innovate and develop independently, actively expand its own brand business and explore the field of new energy, and is expected to become a new profit growth point for the company. The estimated net profit for 24-26 is 963 million yuan, 1,099 million yuan, and 1,221 million yuan, +24%, +14%, and +11% year-on-year, corresponding to PE 12.1x in 24.
Risk warning: Red Bull disputes, raw material price fluctuations, customer food safety risks.