Incident: The company released its first-quarter performance report. In 23Q1, it achieved revenue of 4.724 billion yuan, an increase of 2.48% over the previous year; net profit of Fumo reached 591 million yuan during the same period, an increase of 5.58% over the previous year; net profit after deducting non-return to the mother was 562 million yuan, an increase of 3.98% over the previous year.
The 23Q1 performance grew steadily under a high base, and leading plasterboard companies benefited from the recovery of real estate. Against the backdrop of a high revenue base in 22Q1, the 23Q1 company achieved a correction in its revenue growth rate. As a leading gypsum board player, the company benefited from the recovery trend in real estate sales, and its leading position in the industry was stable. The gross margin of 23Q1 was 26.91%, compared to the 22Q1 gross profit margin of 28.39%, down 1.48pct, while the cost rate for the 23Q1 period was 13.19%, down 1.7 pct compared to the 14.9% cost rate in the 22Q1 period. Among them, the reduction in management expenses was the main reason. Compared with the decline of 1.63 pct, the company, as a leading gypsum board company under China Building Materials Group, saw a steady increase in operating efficiency in the context of the three-year reform of state-owned enterprises. At the same time, in the context of the company improving its channel network in '23, the company's sales expense ratio increased slightly in 23Q1, an increase of about 0.1 pct compared to the same period last year.
The growth rate of receivables was slightly higher than the growth rate of revenue, and operating cash outflow declined. In Q1 of 2023, the company's accounts receivable and notes were 3.731 billion yuan, an increase of 5.6% over the previous year. Among them, notes receivable decreased 14.4% year on year, accounts receivable increased 6.9% year on year, and other accounts receivable increased 67.34% year on year during the same period. The growth rate of the company's accounts receivable was higher than the revenue growth rate, mainly due to the company adjusting the credit policy and implementing the annual sales policy for the credit increase period. The net cash outflow generated by the company's operating activities in 23Q1 was 317 million yuan, a decrease of 95 million yuan compared to the same period last year. The 23Q1 company's revenue ratio was 0.725x, down 0.055x from 0.779x in the same period last year, and the company's cash recovery rate declined slightly.
The waterproofing business grew in double digits in 23Q1, and the remaining 51% of Lighthouse Paint's shares were acquired. In 2023, on the basis of maintaining its leading position in the gypsum board business, the company will continue to develop the “waterproofing and coating” business in the “two wings in one”.
After acquiring a number of subsidiaries one after another, Beixin Waterproofing entered a healthy development path in 2023. At the beginning of April, Beixin Waterproofing's chairman management stated that the company's overall 23Q1 business situation outperformed the industry, and revenue increased by double digits. In the paint business, the subsidiary Beixin Paint recently announced that it will acquire the remaining 51% of Tianjin Lighthouse Paint's shares for 130 million yuan. After the transaction is completed, Beixin Paint will hold 100% of Lighthouse Paint's shares. As a leading enterprise in the aerospace coatings industry, Lighthouse Coatings has many years of R&D and production experience in high-precision fields such as national key military projects and special coatings. By the end of 2022, the company's Lighthouse Paint Nangang project, with an annual output of 50,000 tons of paint and 20,000 tons of resin, was completed and put into operation, which is expected to achieve an annual output value of about 900 million yuan. The subsidiary Beixin Paint holds independent shares in industrial paint companies, indicating that the company's paint layout is not limited to the original downstream real estate and municipal business, but rather operates in various sectors of architectural coatings and industrial coatings.
Continuously improve the company's channel network and enhance the consumer attributes of products. The company mainly adopts the channel sales model and has now established a flat dealer network. Under the current changes in downstream demand, the company is actively seeking new development directions.
On the one hand, the company increased the number and channel types of channels, promoted the four transformations of “public installation to home improvement, city to county and township, base material to surface material, product to service”, stepped up efforts to expand the retail business in counties, towns, and home improvement, hedge against downward pressure in traditional building development fields, and achieve steady growth in home improvement retail sales and county sales throughout the year. On the other hand, in terms of marketing, the company insisted on the three-dimensional saturated marketing of “factory+workshop” to seize opportunities to boost emerging blue ocean products such as urban renewal, old house renovation, consumption upgrades, etc., to accelerate the advantageous markets of emerging blue ocean products such as urban renewal, old house renovation, and consumer upgrades. The transformation of a comprehensive manufacturer of consumer building materials. In March 2023, the company's high-end gypsum board brand Longpai Group announced the first batch of cooperation contracts of 1 billion plus revenue for the gypsum board+ customization business. It is expected that the gypsum board+ customization business will continue to be signed in the near future.
Investment advice: Considering that downstream demand stabilized in 23, revenue entered a steady growth channel, and profit growth increased as costs were further reduced, we expect the company's net profit to be 3963/44.27/4.96 billion yuan respectively in 2023-2025, EPS was 2.35/2.62/2.94 yuan respectively, and the corresponding PE valuation was 11.06/9.9/8.84 respectively, maintaining the “buy” rating.
Risk warning: The year-on-year increase in infrastructure and municipal investment fell short of expectations, downstream real estate developers have not stabilized, and the growth in raw material prices has exceeded expectations.