23Q1 revenue/net profit attributable to the mother +2.5%/+5.6% year on year, maintaining the “buy” rating
On April 28, the company released its quarterly report: revenue/net profit of 47.2/590 million yuan for the first quarter of 2023, +2.5%/+5.6% year on year. We are optimistic about the medium- to long-term growth brought about by the company's integrated and accelerated layout, and when raw material prices decline on the cost side, performance may be highly elastic. We maintain the 23-25 net profit forecast of 33.2/384/4.44 billion yuan. Comparable with the company, Wind in '23 expected an average value of 18XPE, and gave it 18XPE in '23, with a target price of 35.39 yuan, maintaining the “buy” rating.
23Q1 gross margin declined slightly, and cost pressure eased somewhat
In 23Q1, the company's overall gross profit margin was 26.9%, -1.5pct year-on-year, and -2.3pct month-on-month. On the cost side, according to Wind, the average price of domestic waste cardboard (which can characterize the price trend of gypsum board raw materials) /asphalt (waterproof raw materials) in 23Q1 was -27.4%/+11.3% year-on-year, and -16.0%/-8.1% month-on-month. The cost of raw materials for gypsum board, the main business, decreased significantly year on year, and asphalt prices continued to rise year on year, but the year-on-year growth rate narrowed, and the pressure on the cost side of the waterproofing business eased. On the demand side, according to Wind, the ratio of new real estate starts and completed area in January-January was -19.2%/+14.7%. We believe that the relatively strong completion side may have a significant impact on demand for gypsum board.
The 23Q1 fee rate declined year on year, and net operating cash flow increased the cost rate for the 23Q1 period by 13.2% year on year and -1.7 pct year on year. Among them, the sales/management/R&D/finance expense ratio was 4.4%/5.3%/3.1%/0.4%, respectively, and +0.1/-1.6/+0.0/-0.1pct over the previous year. 23Q1 interest-bearing debt ratio/balance ratio 8.7%/24.4%, -4.0/-2.4pct year-on-year. 23Q1 net interest rate to the mother/net interest rate after deduction of non-return to the mother was 12.5%/11.9%, +0.4/-4.3pct year on year, -4.6/+4.1pct month-on-month. 23Q1 operating cash flow - 320 million yuan, +100 million yuan year on year, 23Q1 payout ratio was 1.39/0.90, -0.05/-0.10 year on year, +0.40/-0.17 month on month.
Gypsum board business leads collaboratively, and new waterproof regulations help development
According to the company's annual report, the growth rate of the company's gypsum board business in '22 was higher than the growth rate of the industry, and the market share of the company's gypsum board business increased passively. The company continues to strengthen the “Dragon, Taishan, Dream” brand linkage and the comprehensive coverage of the “Double Pyramid+Moat”, focusing on deepening efforts in North China and the Central Plains region. The “General Code for Waterproofing of Construction and Municipal Engineering”, implemented since April 1, establishes a new entry threshold for the industry, which is conducive to accelerating the exit of low-quality waterproofing systems, promoting increased concentration in the waterproofing system industry, and helping the company develop its waterproofing business. According to the company announcement (No. 2023-021), the company's subsidiary Beixin Paint plans to acquire 51% of Tianjin Lighthouse Paint's shares for 130 million yuan. We believe that the company's gypsum board business is expected to strengthen collaboration, and that the integration and expansion of the waterproofing and coating business is expected to steadily go hand in hand and continue to expand its business footprint.
Risk warning: the price increase of raw materials exceeds expectations; the integration of waterproofing business falls short of expectations; the risk of anti-monopoly policies is spreading.