Event: The company released its 2023 annual report. In 2023, the company achieved operating income of 312 million yuan, -89.50% year on year; realized net profit to mother - 267 million yuan, -170.39% year on year. The large decline in the company's performance was mainly due to problems with product traceability from the US Customs. The products were restricted from customs clearance, which interfered with the normal production and operation of the company.
Affected by this, the company's capacity utilization rate dropped sharply in 2023, and production costs increased accordingly. At the same time, due to the blocking of US customs clearance, a large amount of inventory was generated, and the company fully calculated inventory impairment losses due to the principle of prudence, and the loss amount was large.
Launched a new PET composite floor and is committed to becoming a new environmentally friendly decorative material provider. In 2023, the company launched a new PET composite decking product and took the lead in successfully achieving mass production standards in terms of process. In the future, the company will continue to adhere to technology research and product innovation as the core, continue to promote the company's R&D and application of new products, new materials, new technologies, etc., and gradually upgrade the company from a single PVC flooring manufacturer to a comprehensive provider of new environmentally friendly decorative materials. (1) Rapidly promote the industrialization of new products such as PET, and continue to optimize production processes and improve product quality; (2) promote the application and R&D of various new materials such as inorganic materials in the industry in line with the growing market demand for new materials such as non-PVC; (3) expand the company's product categories and promote the development and production of new products such as outdoor plastic wood composite decking; (4) Continue to optimize the production process to further improve the automation and intelligence of the production process to improve production efficiency and product quality.
Optimize and promote the global production capacity layout to reduce the impact of trade policy changes. The company will further optimize the global production capacity layout, adjust the Southeast Asian production capacity layout structure, invest in the construction of a new intelligent production line project with an annual output of 20 million square meters of inorganic composite flooring in the US to meet customers' supply chain safety decision-making needs, resolve customs clearance crises, and combine industrial localization methods with technological research and development advantages to create the company's outstanding competitive advantage in the US market. The company will expedite early overseas investment filing and approval procedures, as well as various approval procedures, asset purchase, and renovation and expansion work in the country where the project is located, so that the project can be completed and put into operation as soon as possible.
Profit forecasting and investment ratings. Affected by the demand side, we expect the company's EPS for 2024-2026 to be -0.10 yuan, 0.74 yuan, and 1.04 yuan respectively (the original forecast for 24-25 was 2.75 yuan and 3.16 yuan). Referring to the valuation level of comparable companies, the 2024 BPS was given 13.82 yuan, 1.6 times PB, and the corresponding target price was 22.11 yuan (original target price of 48.00 yuan, 20 times PE in 2023, corresponding to PB 1.55 in 2023, equivalent to 26.67 yuan after the 1.8-for-1 stock split, -17%) to maintain a “superior to the market” rating.
Risk warning. Project construction progress falls short of expectations; product prices fluctuate greatly; supply chain traceability issues are difficult to solve.