The company released the first quarter report of 2023. 2023Q1 achieved revenue of 4.724 billion yuan, an increase of 2.5%; net profit returned to the mother was 591 million yuan, an increase of 5.6%; and EPS was 0.35 yuan, an increase of 5.7%. The improvement in 22023Q1 completion data led to a recovery in downstream demand for gypsum board, and lower waste paper prices reduced cost pressure. Maintain the company's buying rating.
Key points to support ratings
There was a slight increase in performance and a reduction in the scale of net operating cash outflow. 2023Q1 achieved revenue of 4.724 billion yuan, an increase of 2.5%; the net profit of the mother was 591 million yuan, an increase of 5.6%; and EPS was 0.35 yuan, an increase of 5.7%.
The net operating cash flow of the 23Q1 company was -317 million yuan. The net outflow was 23.1% less than the same period last year, mainly due to the year-on-year decline in cash paid by Q1 companies for purchasing goods and receiving labor services.
The company's gross margin and net interest rate to the parent were relatively stable year-on-year in 23Q1. The gross margin of the 2023Q1 company was 26.91%, down 1.48 pct from the same period, a slight decrease of 0.53pct from 22Q4; the net interest rate returned to the mother was 12.51%, an increase of 0.36 pct, and a decrease of 4.62 pct from 22Q4. In terms of the period fee rate, the 2023Q1 company's period fee rate was 13.19%, less 1.70 pct. Among them, the sales/management/R&D/finance expense ratio was 4.37%/5.31%/3.10%/0.41%, respectively, with year-on-year changes of 0.07/-1.63/-0.02/-0.12pct, respectively.
The improvement in 23Q1 completion data led to a recovery in downstream demand for gypsum board, and the price of waste paper also reduced the pressure on the cost side. The completed area of real estate in March was 62 million square meters, an increase of 32.0%; the total area completed in the first quarter was 194 million square meters, an increase of 14.7%. There was also a slight increase over the same period in 2021 and 2019. The overall performance of completion data for the first quarter was good. The improvement in completion data can drive a recovery in demand for downstream decoration materials, and demand for gypsum board is expected to improve. Moreover, the price of 2023Q1 waste paper declined significantly compared to the same period last year, and the company's cost pressure was further reduced.
The company's channel layout has been continuously improved, laying the foundation for further development. The company stepped up new product development efforts and continued to promote the “gypsum board +” business; continuously optimized the channel layout, stepped up efforts to expand retail business in counties, towns, and home improvement; increased the market share of emerging blue seas such as urban renewal and consumption upgrades; and accelerated the transformation of its main business products to consumer building materials. The company's international business layout is also progressing steadily.
valuations
Q1 The company is improving steadily, and we maintain our original profit forecast. The company's revenue for 2023-2025 is estimated to be 221.1, 248.3, and 28.58 billion yuan; net profit returned to the mother is 35.9, 416, and 4.93 billion yuan respectively; EPS is 2.12, 2.46, and 2.92 yuan respectively. Maintain the company's buying rating.
The main risks faced by ratings
Production capacity investment fell short of expectations, the recovery in downstream demand fell short of expectations, and the rise in raw material prices exceeded expectations.