Core views:
The company released its 2022 annual report, achieving revenue of 19.034 billion yuan in 2022, -5.49% year on year, net profit of 3.136 billion yuan, -10.71% year on year, after deducting non-net profit of 2,615 million yuan, -23.39% year on year; non-recurring profit and loss were mainly asset disposal income of 478 million yuan.
The industry is at the bottom of the boom, and the company is operating steadily. The real estate sentiment continued to deteriorate in 2022. Revenue and profit growth rates were high and low, and gross margin and net interest rates declined slightly year-on-year, but in the phase of poor industry sentiment and financial pressure, the company still achieved high-quality operations. In 2022, the company's operating cash flow was 3.66 billion yuan, -4% year on year, with a revenue ratio of 1.04 and a net present ratio of 1.17. Gypsum board business: Market share increased steadily, structural upgrades and strong pricing power brought stable strong profitability. Sales volume was -12% year over year, gross profit per unit was 2.23 yuan, and +0.07 yuan year on year. Sales of light steel keels were -8% year on year, and the matching ratio continued to increase. The decline in costs led to an increase in profit. The gross profit margin was 18.94%, an increase of 0.51 pct over the previous year.
Waterproofing revenue was -18.88% year on year. Profit pressure was under pressure due to a sharp decline in demand and raw material pressure. The gross profit margin was 17.04%, a year-on-year decline of 6.62 pct, and net profit - 95 million yuan.
The interior continues to be integrated, has an integrated two-wing layout, and there is still plenty of room in the medium term. Internal collaboration in the gypsum board business continues to advance, which is expected to bring about cost reduction and efficiency and channel synergies; by increasing and optimizing channels, adjusting the product structure (continuing high-end, strengthening the expansion of “gypsum board +”) will drive high-quality management of lightweight building materials. Internal integration and optimization of waterproof mergers and acquisitions is expected to improve profitability. The paint business has a lot of room for future growth as the focus of the group and company at the strategic level increases.
The economy and gross margin are expected to improve year over year in 2023.
Profit forecasts and investment recommendations. We expect the company's net profit to the parent for 2023-2025 to be 3.6, 43, and 5 billion yuan respectively, and the corresponding PE is 12.9, 10.9, and 9.4X. Referring to comparable company valuations and the company's future growth rate, we maintain our judgment that the company's reasonable value of 32.56 yuan/share corresponds to the company's 2023 PE valuation of about 15X, maintaining the “buy” rating.
Risk warning. The risk of falling downstream demand, the risk of raw material prices rising too fast, the risk of a sharp expansion of production capacity in the industry, the risk of waterproofing business integration, etc.