The company continued its excellent performance in the first quarter of '24. The company achieved revenue of 2.40 billion yuan in 2023, +35.99% year-on-year; net profit to mother was 734 million yuan, +89.02% year-on-year. Among them, 2023Q4 achieved revenue of 626 million yuan, +21.27% year over year, and net profit to mother of 197 million yuan, +47.33% year over year. 2024Q1 achieved revenue of 712 million yuan, +21.10% year over year; net profit to mother of 220 million yuan, +37.16% year over year. Relying on the release of the company's new product production capacity and the expansion of orders from major customers, the company's main business revenue increased steadily, while the continuous increase in the proportion of high-margin new sunscreen categories led to a further upward trend in the profit side.
The construction of the Malaysian factory continues to consolidate the leading position in sun protection in the world. The company announced in November 2023 that it will invest in the construction of a series of sunscreen product projects in Malaysia, with an estimated production capacity of 10,000 tons. The construction period of the project is 24 months, and related products are expected to be shipped in the second half of 2025. As overall downstream demand for sunscreen continues to improve, the company's increased production line construction in Malaysia can effectively meet the needs of the sunscreen market in Asia Pacific, Europe and other regions, and continue to consolidate its leading position in the global sunscreen market.
Gross profit margins are rising at an accelerated pace, and cost ratio control is good. The company's gross margin/net margin in 2023 was +12.17pct/+8.57pct, respectively. 2024Q1 gross margin/net margin was -1.21pct/+3.59pct, respectively, and +1.19pct/-0.70pct month-on-month, respectively. Increased capacity utilization and the release of high-margin new product production capacity represented by new sunscreen agents have further increased the company's overall profitability. On the cost side, the rate of sales/management/R&D expenses in 2023 was +0.40pct/+0.78pct/+0.16pct year-on-year. 2024Q1 sales/management/R&D cost rates were -0.31pct/-0.43pct/-0.85pct, respectively, and overall cost control was good.
The overall performance of operating capacity was steady. The company's inventory/revenue account days in 2023 were +1/+8 days year on year, respectively; the number of 2024Q1 inventory/accounts receivable turnover days was -34/+15 days year on year, respectively, benefiting from the improvement in downstream demand and overall inventory turnover efficiency. Net operating cash flow in 2023 and 2024Q1 was +178.14%/-6.24%, respectively. The sharp increase in 2023 was mainly due to the rapid increase in the company's product sales revenue.
Risk warning: Macroenvironmental risks, capacity expansion falls short of expectations, and industry competition intensifies.
Investment advice: In 2023, the company relied on the release of new product capacity and the expansion of orders from major customers to achieve a further increase in market share, while increasing the share of high-margin new products led to continuous optimization of profit levels. Looking forward to the future, on the one hand, as production capacity of new high-margin sunscreen products continues to be released, the company's overall profit level still has room to rise; on the other hand, as production capacity such as PO and amino acid surfactant, as new personal care ingredients are gradually released, providing a new growth driver for the company, and the commencement of the Malaysian factory also guarantees the company's long-term production capacity. Considering that the overall demand for downstream sunscreen is still positive, the company's production capacity competitiveness is still being strengthened, and it is expected that product prices will remain high, we slightly raised the company's 2024-2025 net profit to 9.47/1,183 billion yuan (original value was 9.34/11.21 billion yuan), and added the 2026 forecast of 1,460 billion yuan, corresponding to PE 16/13/10 times, maintaining the “increase” rating.