Incidents:

On March 27, 2024, Shuangjian Co., Ltd. released its 2023 annual report: achieved operating income of 2,593 million yuan in 2023, up 11.03% year on year; realized net profit of 242 million yuan, up 112.60% year on year; realized net profit after deduction of 231 million yuan, up 90.15% year on year; gross sales margin of 20.75%, up 3.78 pct year on year, net sales margin of 9.40%, up 4.55 pcts year on year; net cash flow from operating activities was 120 million yuan, year on year decrease 27.54%

In the 2023Q4 quarter, the company achieved operating income of 738 million yuan, +15.66% year over month, +12.84% month on month; realized net profit of 80 million yuan, +177.68% year on year, +32.83% month on month; net cash flow from operating activities was -96 million yuan, down 175 million yuan year on year, down 188 million yuan month on month. Gross sales margin was 21.99%, up 0.83 pct year on year and down 0.97 pct month on month. Net sales margin was 10.95%, up 6.43 pct year on year and 1.71 pct month on month.

Investment highlights:

Net revenue in 2023 increased sharply year on year. Conveyor belt sales continued to rise in 2023. The company produced 803.16,600 square meters of various rubber conveyor belts, an increase of 11.02% over the previous year; achieved operating income of 2,593 billion yuan, an increase of 11.03% year on year; realized net profit attributable to shareholders of listed companies was 242 million yuan, an increase of 112.60% year on year. Net cash flow from operating activities in 2023 decreased by 27.54% compared to the same period last year, mainly due to an increase of 212 million yuan in cash received from sales of goods and provision of services in 2023, an increase of 11.87%, and cash from purchasing goods and receiving labor payments increased by 301 million yuan, an increase of 22.93%. Among them, notes payable due and payable in 2023 increased by 131 million yuan over the previous year due to adjustments in the longest payment period for acceptance bills.

2023Q4 revenue and profit increased both year on year and month on month in a single quarter

2023Q4 achieved net profit of 80.83 million yuan, an increase of 20.36 million yuan, and 2023Q4 achieved gross profit of 162 million yuan, an increase of 12.13 million yuan. In terms of expenses, 2023Q4 sales expenses were 32.41 million yuan, an increase of 6.23 million yuan over the previous month; management expenses were 27.49 million yuan, an increase of 2.93 million yuan over the previous month; R&D expenses were 2.38 million yuan, a decrease of 2.38 million yuan over the previous month, and financial expenses were -3.94 million yuan, a decrease of 6.33 million yuan over the previous month, mainly due for fixed deposits in 2023 This is due to an increase in interest income earned compared to the same period last year. Credit impairment losses in Q4 were 3.19 million yuan, a decrease of 1.32 million yuan over the previous month.

The Tiantai project is progressing smoothly, and the commissioning of the new project will continue to contribute. The first phase of the 60 million square meter conveyor belt project with an annual output of 700 million yuan, which Zhejiang Taisheng Intelligent Transportation Technology Co., Ltd., a wholly-owned subsidiary of the company, has completed the infrastructure. Next, it will enter the trial production stage. In the future, the commissioning of the project will further increase the company's production capacity to increase market share. The Double Arrow Technology Building project, which the company invested 355 million yuan to build, is progressing smoothly.

Expanding new application scenarios. Long-distance conveyors have replaced traditional road transportation. In recent years, due to the country's stricter environmental requirements and the companies' own demand for energy saving and efficiency, the method of using conveyor belts to transport bulk materials has been used more. For example, using conveyor belt transportation instead of truck transportation has obvious advantages. Compared with truck transportation, conveyor belt transportation of bulk materials has the advantages of being safer, more environmentally friendly, more energy-efficient and efficient. Therefore, the company's downstream customer electricity, cement, steel, port and other industries have gradually built long-distance conveyor belt projects in recent years to replace traditional road transportation, and demand for long-distance conveyor belts will steadily increase in the future.

Profit forecast and investment rating According to industry sentiment, we adjust the company's profit forecast. We expect the company's net profit to be 3.11, 3.99, and 498 million yuan respectively in 2024/2025/2026, corresponding to PE of 10, 8, and 6 times. Considering the company's strong long-term growth, we maintain a “buy” rating.

Risks indicate the risk of raw material price fluctuations; sea freight rates continue to rise; product demand falls short of expectations; downstream customers do not pay in a timely manner; and project construction progress falls short of expectations.