Key points of investment
Incident: The company's revenue in 2023 was 4.8-5 billion yuan, down 6-10%; net profit to mother was 2.4 to 220 million yuan, down 539-579%; net profit not attributable to mother was 2.6 to 240 million yuan, a decrease of 945 to 1015%.
Among them, 2023Q4 revenue was 8.5 to 1.05 billion yuan, a decrease of 11-28%; net profit to mother was 1.6 to 140 million yuan, a decrease of 74-98%; net profit after deducting non-return to mother was 1.6 to -140 million yuan, a decrease of 51-72%, which was lower than market expectations.
Due to product price drops and inventory losses, 2023Q4 results fell short of expectations. We expect to ship 55-6 million square meters of adhesive film in 2023, an increase of 30% +. Of these, the 2023Q4 shipment will be about 1-150 million square meters, a drop of about 30%, mainly due to falling component production schedules and weakening demand. Profit side: At the management level, considering that the price of plastic film declined with particle prices, gross margin was under pressure, and the company changed its inventory strategy. Inventory costs were not reduced as a result of fewer purchased particles during the price reduction of 2023Q4 particles, and there were many losses in the 2023Q4 inventory impairment. Overall, we expect a net profit reduction of 1 yuan to about -1 to 1.5 yuan/square meter, causing the company's performance to fall below expectations, but with the inventory strategy adjustment, the company's 2023Q4 operating cash flow has changed from negative to positive.
2024Q1 We expect a slight month-on-month improvement. Looking ahead to 2024 Q1:1) Cost side: particle prices drop to 10,000 yuan/ton, we expect particle costs to improve month-on-month in 2024Q1; 2) Price side: although particle prices have rebounded slightly, film prices have not been transmitted in a timely manner, and prices are still at a low level; 3) Shipping side: January and February were affected by weak demand and the Spring Festival holiday, and shipments declined slightly month-on-month. We expect shipment improvements in March to be quite obvious. Overall 2024Q1 results are expected to improve slightly from month to month.
Profit forecast and investment rating: Based on the company's performance falling short of expectations, we expect the 2023-2025 net profit of -2.3/1.6/260 million yuan (the value before 2023-2025 was 4.2/7.4/990 million yuan), an increase of -556%/171%/61%. Considering the intensification of competition in the adhesive film industry, declining prices and pressure on profits, it was lowered to an “increase” rating.
Risk warning: Policies fall short of expectations, and competition intensifies.