Event: The company publishes its 2023 annual report. During the reporting period, the company achieved revenue of 1,067 billion yuan, -4.95% YoY; net profit to mother of 75 million yuan, -29.17% YoY; and basic earnings per share of 0.19 yuan. Among them, the company achieved revenue of 306 million yuan in a single quarter, +9.4% year on year; net profit to mother was 024 million yuan, +3.13% year over year.
Gross margin increased slightly throughout the year, expense ratios increased, and net profit margins declined year-on-year.
In terms of gross margin, in 2023, the company's comprehensive gross margin was 23.57%, +0.11 pct year-on-year. Among them, the gross margin for the 23Q4 single quarter was 25.59%, +3.3 pct year over year, and +1.58 pct month-on-month.
In terms of cost rate, in 2023, the company's cost rate was 15.67%, +1.73 pct year-on-year. Among them, the sales/management/R&D/finance cost rates were 2.43%/7.89%/3.71%/1.65%, respectively, with year-on-year changes of +0.21 pct/+0.54 pct/+0.18 pct/+0.81 pct.
In terms of net interest rate, in 2023, the company's net interest rate was 6.47%, -2.88 pct. Among them, the company's net interest rate for the 23Q4 single quarter was 6.94%, -1.1 pct year on year, and +0.68 pct month-on-month.
Industrial paper packaging promotes customer expansion, and production capacity layout supports performance growth. In 2023, the company's industrial paper packaging business achieved revenue of 771 million yuan, +3.09% year-on-year. In the future, the company will continue to expand new customers to achieve growth, follow the growth of existing customers, and increase customer procurement share through comprehensive advantages in long-term cooperation. At the same time, the company invested in capacity expansion and planned production capacity of 366 million industrial paper bags. Future releases will support performance growth.
Composite plastic packaging awaits recovery in demand for cheese bars, and profitability is expected to gradually improve. In 2023, the company's composite plastic packaging business achieved revenue of 167 million yuan, -32.86% over the same period, mainly because the unit price of the terminal cheese stick market is high, which is affected by the decline in consumption power, which in turn led to a decline in the company's order volume. Looking forward to the future, short-term demand for cheese sticks will continue to recover from the bottom, and the medium to long term will fully benefit from the increase in the penetration rate and per capita consumption of the cheese industry. In addition, the decline in orders led to an increase in fixed cost sharing. The gross margin of composite plastic packaging fell to 20.86% in 2023, -7.96 pct year on year. Profitability is expected to continue to improve in the future as orders resume.
The new photovoltaic productivity is strategically laid out, and the spacious space is expected to grow rapidly. Based on existing resource capacity, the company entered the field of photovoltaic backsheet films and composite frames, and signed a strategic cooperation with Suntech Electric Power. Production capacity implementation is expected to receive large orders. According to CPIA statistics, in 2023, the world's new PV installations reached 390 GW, an increase of 69.57% over the previous year. Under conservative/optimistic conditions in 2028, they are expected to reach 487/562 GW, respectively, and the 5-year CAGR is 4.54%/7.58%, respectively.
Investment advice: The company is deeply involved in industrial paper packaging, production capacity release supports expansion. The bottom of composite plastic packaging continues to improve, and the production capacity of new photovoltaic products is expected to achieve rapid growth in the future. The company is expected to achieve basic earnings of 0.3/0.41/0.61 yuan per share in 2024/25/26, corresponding to PE of 33X/24X/16X, maintaining the “recommended” rating.
Risk warning: risk of a sharp rise in raw material prices, risk of downstream demand falling short of expectations, risk of new business sales falling short of expectations, risk of increased market competition