公司发布2023 年年报及2024 年一季报。2023 年公司实现收入49.8 亿元，同比增长19.0%；实现归母净利润7.8 亿元，同比增长25.5%。2024 年一季度公司实现收入12.7 亿元，同比增长2.5%；实现归母净利润2.2 亿元，同比增长32.6%。Core views
The company is a leading company in the molded bottle industry, and its market share in borosilicate glass molded bottles is as high as 88.2%. Benefiting from consistent evaluation and continuous promotion of collection, demand for borosilicate molded bottle products is strong, and the penetration rate is expected to continue to increase in the future; at the same time, strong export prosperity is also driving the company's molded bottle and brown bottle business growth. In 2023, the company achieved revenue of 2.26 billion yuan, an increase of 29.4% over the previous year; the brown bottle business achieved revenue of 1.12 billion yuan, an increase of 29.1% over the previous year, and the gross margin of the two businesses stabilized at high levels of 39.2% and 23.8%. Currently, the company's molded bottle production and sales rate has reached 106%. It is expected that in the future, as the company's fund-raising production capacity is gradually implemented, the company's performance will continue to grow.
occurrences
The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 4.98 billion yuan, a year-on-year increase of 19.0%; realized net profit of 780 million yuan to mother, an increase of 25.5% over the previous year. In the first quarter of 2024, the company achieved revenue of 1.27 billion yuan, an increase of 2.5% year on year; realized net profit of 220 million yuan to mother, an increase of 32.6% year on year.
Brief review
Revenue growth slowed month-on-month, benefiting from lower raw material costs and a significant increase in profits. In 2023, Q4 and 2024Q1 companies achieved revenue of 1.31 billion yuan and 1.27 billion yuan, with year-on-year growth rates of 9.8% and 2.5% respectively. There was a slight slowdown from the first three quarters of 2023, mainly due to the continued decline in the non-main commercial and trade business, which dragged down overall revenue performance. The company's gross margins for 2023Q4-2024Q1 reached 27.5% and 30.6% respectively. Profit margins increased markedly in the first quarter, mainly due to: 1. The price of soda ash fell in the first quarter. By the end of March, the price of heavy alkali had fallen to 2,000 yuan/ton, a year-on-year decrease of 32.3%; 2. In response to the high prices of soda ash, coal, and borax in 2023 to squeeze the company's profits, the company adopted various methods to reduce costs.
Increased penetration rate of borosilicate combined with high export boom led to high growth in molded bottles. In 2023, the company achieved revenue of 2.26 billion yuan, an increase of 29.4% over the previous year; brown bottles achieved revenue of 1.12 billion yuan, an increase of 29.1% over the previous year. Together, the two accounted for 85.2% of total revenue. This high growth was the main support for the steady growth of the company's revenue. The main reasons for maintaining high revenue growth for molded bottles and brown bottles include: 1. Benefiting from consistent evaluation and continuous promotion of collection, borosilicate molded bottle products are in strong demand; 2. The company leverages its scale, quality, facilities and price advantages to expand exports of brown bottles, daily chemical food bottles, and molded bottles (injections). Due to the good competition pattern of molded bottles in China, only three companies have listing qualifications, and the company is a leader in the molded bottle industry. According to data from the Shandong Provincial People's Government, its market share in borosilicate glass molded bottles is as high as 88.2%. The gross margins of the company's molded bottles and brown bottles reached 39.2% and 23.8% respectively, which is stable compared to last year.
Production capacity continues to expand, and production and sales remain high. The company's molded bottle production and sales rate reached 106% in 2023, an increase of 19.4 percentage points over 2022. The current growth in performance is mainly limited by the growth rate of production capacity. In 2023, the company built a borosilicate molded bottle plant workshop (with two kilns). One of these kilns was put into operation in November 23, and sales of borosilicate molded products are expected to continue to grow rapidly with the support of additional production capacity.
The purchase rating is maintained, and the target price is 34.1 yuan/share. We expect the company's revenue in 2024-2026 to reach $58.7/69.5/8.29 billion yuan, up 17.7%/18.5%/19.2% year on year; net profit to mother will reach 9.44/11.7/1.42 billion yuan respectively, up 21.7%/24.0%/21.2% year on year. Referring to the valuation of comparable companies Linuo Tebo and Zhengchuan shares, we gave the company 24 times PE in 2024, corresponding to a target price of 34.1 yuan/share, maintaining a “buy” rating.
Risk analysis
1. The price of borosilicate molded bottles declined more than expected due to increased competition. Currently, the leading molded bottle in the industry is Shandong Pharmaceutical. In April 2024, the registration number of Borosilicate glass molded bottles from Linuo Tebo changed to “A”, indicating that borosilicate glass molded injection bottles can be officially listed in batches, and the number of companies with the qualification to list borosilicate molded bottles in the industry has increased to three; in the future, as more and more companies successfully switch to A, competition for borosilicate molded bottles will intensify, and prices will also face fluctuations.
2. Raw material costs have risen more than expected. In the company's cost split, direct material costs accounted for 30.5%, and fuel power costs accounted for 18.6%, accounting for a total share of 49.1%. If the prices of soda ash, borax, coal, and natural gas rise above expectations, it will also erode the company's profit performance.
3. The progress of the company's fund-raising project fell short of expectations. In August 2022, the company planned to expand production and transformation projects to expand production of 4 billion first-class medicinal glass bottles and 560 million pre-filled syringes per year. By the end of 2023, the cumulative investment progress reached 17.7% and 81.2% respectively. The future growth of the company's performance will largely depend on the progress of production capacity investment. If the progress of subsequent projects falls short of expectations, it will also put pressure on the company's performance growth.
