Riyue HI(SH:603218) SINOLINK SECURITIES·2024-04-25 06:30Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company reported a revenue of 4.66 billion RMB in 2023, a decrease of 4.3% year-on-year, while the net profit attributable to shareholders was 480 million RMB, an increase of 39.8% year-on-year [1] - The fourth quarter saw a revenue of 1.13 billion RMB, down 26.8% year-on-year and 0.7% quarter-on-quarter, with a net profit of 129 million RMB, down 25.9% year-on-year but up 108.1% quarter-on-quarter [1] - The improvement in profit quality is attributed to a decrease in raw material prices and technological advancements, leading to a gross margin of 18.31%, an increase of 5.95 percentage points year-on-year [1] - The company achieved an operating cash flow of 616 million RMB in 2023, a significant increase of 238.0% year-on-year, due to enhanced customer management and collection of overdue payments [1] - The company is accelerating the development of precision processing capacity, with a current casting capacity of 700,000 tons and precision processing capacity of 320,000 tons, aiming to improve integrated delivery capabilities [1] - Continuous increase in R&D investment, with a research expense ratio of 5.56% in 2023, up 1.00 percentage points year-on-year, focusing on the development of ductile iron technology [1] Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 4.66 billion RMB, with a year-on-year growth rate of -4.3% and a net profit of 480 million RMB, reflecting a growth rate of 39.8% [8] - The projected net profits for 2024 and 2025 are revised down to 694 million RMB (-19.8%) and 836 million RMB (-17.6%) respectively, with an expected net profit of 949 million RMB in 2026 [6] Operational Analysis - The company’s revenue from ductile iron products was 4.50 billion RMB in 2023, down 4.8% year-on-year, with a gross margin of 18.31% [1] - The direct material costs for ductile iron products decreased by 24.6% year-on-year, primarily due to lower raw material prices and reduced consumption from technological improvements [1] Cash Flow and Management - The operating cash flow improved significantly to 616 million RMB, driven by better management of customer payments and an optimized customer structure [1] - The company is focusing on enhancing its integrated delivery capabilities to mitigate the impact of raw material price fluctuations [1] Research and Development - The company increased its R&D spending, with a focus on ductile iron technology, which is expected to open new growth opportunities in various sectors [1]