Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 384 million yuan, +24.72% over the same period last year. Net profit attributable to mother was $46 million, +46.41% YoY. The 23Q4 company achieved revenue of 96 million yuan, a year-on-year increase of 29.52%, and net profit of 7.97 million yuan, a year-on-year decrease of 11.14%; the 24Q1 company achieved revenue of 76 million yuan, a year-on-year decrease of 14.75%, and net profit to mother of 3.7 million yuan, a year-on-year decrease of 46.78%. Net profit margin increased steadily, and R&D expenses remained high. The company's gross sales margin and net sales margin were 32.18% and 11.70% respectively in 2023, +1.26 pct and +1.51 pct compared with 2022, respectively. The reason for the increase in gross margin may be related to the increase in gross margin of composite pressure tank products (+4.51pct year over year). In terms of expenses, the company's management expenses remained stable, with an increase of 3.7% to 43.929 million yuan. Sales expenses and R&D expenses both showed significant increases of 8.135 million yuan and 27.394 million yuan respectively, +54.92% and 28.60%, respectively. Financial expenses were -3.352 million yuan, a decrease of 2.252 million yuan compared to the same period last year, mainly due to exchange rate changes and a decrease in exchange earnings.
Product innovation has been strengthened to broaden application areas, and the gross margin of pressure tanks has increased significantly. By sector, (1) Composite pressure tanks: The company promoted iterative product upgrades and improved product quality and service levels. Composite pressure tank revenue reached 126 million in '23 (up 8.45% year on year), and the gross profit margin was 32.51%, up 4.51 pct year on year.
(2) Reverse osmosis membrane and nanofiltration membrane series products: In line with downstream demand, the company continues to improve production processes and optimize product performance, categories and specifications. It is widely used in various fields. Revenue increased by 32.59% to 179 million yuan, and gross profit margin was 34.86%, an increase of 0.37 pct over the previous year. (3) Membrane element pressure vessels: Provide customers with customized design and processing services according to customer needs, and further broaden product application areas. Revenue reached 61 million yuan, up 40.30% year on year, gross profit margin 19.46%, and -1.90 pct year on year.
Use the advantages to actively lay out salt lake lithium extraction projects to create a second growth curve. The application of “adsorption+membrane method” technology in the field of lithium extraction in salt lakes continues to expand, and the advantages of the membrane process are becoming more and more remarkable. The company has accumulated rich core technology in membrane materials and has actively laid out the salt lake lithium extraction sector to achieve research and development of special nanofiltration membranes for lithium extraction in salt lake. Referring to the company's 2023 annual report, the Tibet Salt Lake lithium extraction project constructed by the company has already entered the equipment installation and commissioning stage, which is expected to promote the further growth of the company's membrane materials business after it is officially put into operation. We believe that with the company's accumulated advantages in membrane materials, the salt lake lithium extraction business is expected to expand rapidly.
Investment advice and valuation: Based on the company's 2023 annual report and 2024 quarterly report, we have adjusted the 24-25 profit forecast and added the 2026 profit forecast. The company's revenue for 2024 to 2026 is estimated to be 473 million yuan, 552 million yuan, and 643 million yuan respectively. Revenue growth rates will reach 23.0%, 16.8%, and 16.4% respectively. Net profit to mother will be 57 million yuan, 72 million yuan and 84 million yuan respectively, and net profit growth rates will reach 24.8%, 25.0%, and 16.7% respectively, maintaining the “plus” investment rating.
Risk warning: Market competition increases risk, risk of project construction falling short of expectations, risk of multinational supply of raw materials, etc.