Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 33.85, indicating a potential upside of 30.2% from the current price of HKD 26.00 [1][2][8]. Core Insights - The company's performance in 2023 met expectations, with a notable recovery in profit margins driven by a high-end product mix and easing cost pressures. Sales increased by 5.1% year-on-year to RMB 23.768 billion, while net profit rose by 45.5% to RMB 2.801 billion [1][2]. - The report highlights that the sales growth rate slowed in the second half of 2023 due to intensified competition and promotional expense management, dropping from 9% in the first half to 1.3% in the second half. However, the gross margin improved significantly to 36.5% in the second half, up from 32.8% in the same period of 2022 [1][2][6]. - The high-end product lines, particularly in tissue and sanitary products, received positive feedback, contributing to the overall sales growth. The wet wipes segment saw a 10.5% increase, while the "Cloud Soft" series achieved a remarkable 26.6% growth [1][2][7]. Financial Performance Summary - For 2023, the company reported a revenue of RMB 23.768 billion, a 5.1% increase from 2022, with core business sales (tissues, sanitary napkins, diapers) growing by 8.0% to RMB 21.18 billion. The net profit for the year was RMB 2.801 billion, reflecting a 45.5% year-on-year increase [3][6]. - The gross margin for the year was stable, with a significant improvement in the second half, where the gross margin reached 36.5%, up 5.5 percentage points from the previous year [1][6]. - The company plans to increase marketing expenditures in the first half of 2024 to support sales growth, particularly in the tissue segment, which is expected to achieve low single-digit growth [2][3]. Future Outlook - The report anticipates low single-digit growth for core business in 2024, driven by the high-end product mix. Despite favorable raw material cost trends, increased market competition may pressure average selling prices [2][3]. - The company is expected to maintain a stable dividend payout, with a total dividend of RMB 1.4 per share for 2023, maintaining a payout ratio of 58% [1][3].
业绩符预期，高端产品组合反馈正面，成本压力缓解引领利润率回升