CCG(SH:605099) GF SECURITIES·2024-04-30 01:02Investment Rating - The report maintains a "Buy" rating for the company, with a current price of 22.30 CNY and a reasonable value of 23.98 CNY [4]. Core Insights - The artificial turf business has seen an increase in volume but a decrease in price. In 2023, the company sold 72.58 million square meters of artificial turf, a year-on-year increase of 12.21%, while revenue from this segment remained flat due to a significant drop in average prices. Specifically, revenue from sports turf was 559 million CNY, down 6.58% year-on-year, primarily due to delays in the construction of sports facilities in China. Revenue from leisure turf was 1.676 billion CNY, up 1.16%, with sales volume increasing by 14.93%, but revenue growth lagged behind sales growth due to price competition and a higher proportion of lower-priced sales in Europe [2][3]. Financial Performance Summary - The company reported a revenue of 2.461 billion CNY in 2023, a slight decrease of 0.38% year-on-year, and a net profit attributable to shareholders of 431 million CNY, down 3.54% year-on-year. The fourth quarter of 2023 and the first quarter of 2024 showed signs of recovery, with revenues of 545 million CNY and 688 million CNY, representing year-on-year growth of 5.18% and 23.14%, respectively. The net profit for these quarters was 79 million CNY and 121 million CNY, reflecting a year-on-year decrease of 15.14% and an increase of 29.35% [16][17]. Production Capacity and Market Position - As of the end of 2023, the company has four production bases in Jiangsu, China, and Xining, Vietnam. The third phase of the Vietnam project is expected to commence construction in the second quarter of 2024. Once fully operational, the company will have an annual production capacity of 146 million square meters of artificial turf, which is anticipated to widen the gap with smaller competitors [17]. Earnings Forecast - The company is projected to achieve earnings per share (EPS) of 1.33 CNY, 1.61 CNY, and 1.90 CNY for the years 2024, 2025, and 2026, respectively. Based on a comparable company analysis, a reasonable valuation for 2024 is set at 18 times the price-to-earnings ratio, leading to a target price of 23.98 CNY per share [3][18].