SD HEAD(SZ:002810) Guohai Securities·2024-05-03 04:30Investment Rating - The report maintains a "Buy" rating for the company [3][12]. Core Views - The company's performance in 2023 was impacted by depreciation and amortization from new facilities, but there are signs of improvement in Q1 2024 [12][34]. - The company is actively adjusting its product and market structure in response to industry supply-demand imbalances and overcapacity [1][34]. - The successful registration of high-end pharmaceutical coating products and the second-generation pure gelatin capsules is expected to enhance the company's market position [1][34]. Financial Performance Summary - In 2023, the company achieved revenue of 1.56 billion yuan, a decrease of 9.7% year-on-year, and a net profit attributable to shareholders of 220 million yuan, down 37.8% year-on-year [3][46]. - The gross profit margin for 2023 was 29.3%, a decline of 4.9 percentage points year-on-year, while the net profit margin was 14.2%, down 6.4 percentage points year-on-year [3][46]. - In Q4 2023, the company reported revenue of 380 million yuan, a year-on-year decrease of 3.5% and a quarter-on-quarter decrease of 11.8% [3][4]. - In Q1 2024, the company recorded revenue of 435 million yuan, an increase of 16.1% year-on-year and 15.3% quarter-on-quarter, with a net profit of 54 million yuan [4][13]. Product Segment Performance - The cellulose ether segment generated revenue of 1.13 billion yuan in 2023, a slight decline of 2.5% year-on-year, with a sales volume of 40,353 tons, up 17% year-on-year [46]. - The plant capsule segment reported revenue of 250 million yuan, down 10.9% year-on-year, with a sales volume of 11 billion capsules, down 8% year-on-year [46]. - The company has a cellulose ether and plant capsule integrated advantage, which is expected to improve capacity utilization as industry demand recovers [1][34]. Capacity and Investment - As of the end of 2023, the company had a cellulose ether production capacity of 69,000 tons, with an additional 5,000 tons under construction and 11,000 tons planned but not yet built [1][34]. - The company has made strategic acquisitions, such as the purchase of Zhongfu Heda, to expand its product matrix, particularly in hydroxyethyl cellulose (HEC) [1][34].