Incident: The company released its report for the first quarter of 2023. 2023Q1 achieved revenue of 1.16 billion yuan, an increase of 28.9% over the previous year; the net profit of the mother was 42 million yuan, a decrease of 14.4% over the previous year.
The equipment business had sufficient on-hand orders, and revenue grew steadily; profitability declined slightly. The company's equipment business, such as material handling equipment, ship supporting equipment, offshore wind power equipment, etc., had sufficient orders on hand, 2023Q1 was delivered steadily, and revenue increased steadily. 2023Q1's consolidated gross margin was 18.4%, a decrease of 3.7 percentage points over the previous year. The company's expense rate for the 2023Q1 period was 12.2%, a decrease of 2.4 percentage points over the previous year. 2023Q1's net interest rate was 5.1%, down 1.3 percentage points from the previous year.
Offshore wind power is booming, and the company is actively exploring domestic and foreign markets. Offshore wind power has outstanding advantages. Coastal provinces and cities have actively introduced installation plans, and the company has fully benefited. China's coastal provinces and cities have continuously introduced offshore wind power development plans. In October 2022, Tangshan, Hebei issued the “Tangshan Offshore Wind Power Development Plan (2022-2035)”, which proposed that by 2025, Tangshan will have installed a total of 3 GW and a total of 13 GW installed in 2035; Chaozhou, Guangdong launched a 43.3 GW offshore wind power development plan, once again confirming the clean energy advantages of offshore wind power. According to our statistics, China's provinces and cities plan to add more than 60 GW of offshore wind power installations during the 14th Five-Year Plan period. As the industrial chain begins to reduce costs at an accelerated pace in 2022, it is expected that offshore wind power will enter a period of rapid development after 2023. The annual production capacity of offshore wind power infrastructure equipment such as single piles and conduit frames at the company's Nantong base has been increased to 300,000 tons, which will fully benefit from growing domestic demand for sea wind. Meanwhile, according to the company's official account, the first batch of offshore wind power foundation piles and ancillary components produced by the company for Japanese customers passed high standards on-site inspection by Japanese customers in February 2023, achieving favorable breakthroughs in overseas markets, laying a solid foundation for the company to further promote overseas business.
Other businesses are developing steadily upward, and there is a high degree of certainty. 1) Material handling equipment: The company has sufficient orders in hand and is expected to exceed 10 billion yuan, and performance growth is highly certain. According to the company announcement, the German subsidiary Koch plans to acquire FLSmidth Group's global bulk handling and handling system and the business's global after-sales service system to further improve the material handling equipment business layout and enhance the company's global influence and product competitiveness. 2) Ship supporting equipment: Beginning in 2021, new orders for China's shipbuilding industry surged, but there was a time lag between ship orders and ancillary equipment orders. Beginning in 2022, the company's ship equipment orders and revenue grew rapidly. In 2022, the business achieved revenue of 4.6 billion yuan, an increase of 679.3% over the previous year. 3) Environmental protection business: The company's main environmental protection subsidiaries, CNPC Environmental Protection and Greenway Environmental Protection, are fully qualified and technologically advanced. In an environment where domestic environmental protection is becoming more stringent, development prospects are good.
Profit forecasts and investment recommendations. The company's net profit to the mother in 2023-2025 is estimated to be 3.9, 499 million yuan, and 640 million yuan respectively. The compound growth rate of net profit to the mother in the next three years will be 128.8%, which will be downgraded to the “holding” rating.
Risk warning: risk of macroeconomic fluctuations, offshore wind power installation or failure to meet expectations, risk of impairment of goodwill.