DFP(SH:601515) Guotou Securities·2024-05-12 23:30Investment Rating - The investment rating for Dongfeng Group is "Accumulate - A" with a target price of 4.15 CNY [3][11]. Core Views - Dongfeng Group's revenue for 2023 was 2.631 billion CNY, a year-on-year decrease of 29.72%, with a net profit of 151 million CNY, down 47.96% year-on-year. The company is undergoing a strategic transformation focusing on new energy and new materials [1][2][11]. - The company plans to deepen its investment in lithium battery negative electrode materials through collaboration with Fiao New Materials, aiming to enhance its industrial layout in this sector [1][2]. Summary by Sections Financial Performance - In Q4 2023, the company reported a revenue of 512 million CNY, a decline of 44.20% year-on-year, and a net loss of 87 million CNY. The adjusted net profit was 51 million CNY, showing a significant increase of 4070.89% year-on-year [1]. - For Q1 2024, revenue was 355 million CNY, down 61.25% year-on-year, with a net profit of 12 million CNY, a decrease of 94.57% year-on-year [1]. Business Structure and Strategy - The company has adjusted its business structure due to increased competition and rising raw material prices. Revenue from various segments in 2023 included: cigarette labels (1.083 billion CNY, down 55.81%), pharmaceutical packaging (712 million CNY, up 22.39%), membrane materials (505 million CNY, up 71.58%), and paper products (162 million CNY, up 30.55%) [2]. - Dongfeng Group is focusing on expanding its new energy materials business, particularly in lithium battery and energy storage sectors, and is actively integrating resources across the supply chain [2][11]. Profitability and Cost Management - The gross margin for 2023 was 23.05%, a decrease of 6.53 percentage points year-on-year. The Q4 gross margin was 19.51%, down 6.87 percentage points year-on-year, while Q1 2024 saw a gross margin of 26.71%, down 1.13 percentage points year-on-year [10]. - The company’s expense ratio for 2023 was 18.41%, an increase of 2.43 percentage points year-on-year, with a notable decrease in sales expenses due to strategic adjustments [10]. Future Projections - Revenue projections for 2024-2026 are 2.063 billion CNY, 2.491 billion CNY, and 3.019 billion CNY, with expected year-on-year growth rates of -21.59%, 20.76%, and 21.18% respectively. Net profit projections are 263 million CNY, 329 million CNY, and 408 million CNY, with growth rates of 74.92%, 25.11%, and 23.73% respectively [11][16].