Huafu(SZ:002042) EBSCN·2024-04-29 02:33Investment Rating - The report downgrades the investment rating to "Neutral" with a target price of 4.56 CNY [1][2] Core Views - The company experienced a revenue decline of 5.51% in 2023, with a net profit of 67.68 million CNY, marking a return to profitability. However, the first quarter of 2024 saw a significant decline in revenue and net profit, with year-on-year decreases of 13.43% and 74.04% respectively, indicating continued weak demand [1][2] - The company is focusing on expanding its domestic market and enhancing its digital factory capabilities while investing in new projects to improve operational efficiency. The expectation is for gradual recovery in performance as demand stabilizes [2][3] Financial Summary - In 2023, the company reported total revenue of 13,663 million CNY, with a projected revenue increase of 7.03% in 2024, reaching 14,623 million CNY. The net profit is expected to grow to 104 million CNY in 2024, up from 67 million CNY in 2023 [3][4] - The earnings per share (EPS) for 2024 is projected at 0.06 CNY, with further increases to 0.12 CNY in 2025 and 0.18 CNY in 2026. The price-to-earnings (P/E) ratio is expected to be 75 in 2024 and decrease to 25 by 2026 [3][4] Market Performance - The company’s revenue breakdown shows that yarn, net chain, and sock products contributed to the overall revenue, with yarn and net chain experiencing declines of 2.23% and 7.86% respectively in 2023. The sock product line saw an increase of 8.04% [1][2] - The company’s domestic sales accounted for 88% of total revenue, with a year-on-year decline of 6.15% in 2023, while overseas sales increased by 3% [1][2] Operational Metrics - The total production capacity at the end of 2023 was 2.06 million spindles, with a capacity utilization rate of 83%, reflecting a slight increase from the previous year [1][2] - The gross margin for 2023 was reported at 4.24%, down 0.96 percentage points from the previous year, indicating pressure on profitability [1][2]