Description of the event
The company released the first quarter report of 2023. Q1 achieved revenue of 16.165 billion yuan, an increase of 11.25%; achieved net profit of 348 million yuan, an increase of 11.35%; and realized net profit of 372 million yuan after deducting unattributed net profit, an increase of 28.79%.
Incident comments
2023Q1 revenue increased 11.25%, and performance increased slightly faster than revenue by 11.35%. The relatively rapid year-on-year growth in performance was mainly due to:
1) Gross margin increased by 0.01pct to 10.84%; 2) Expense rate decreased by 0.6pct to 7.14% during the period; 3) Asset impairment loss rate decreased by 0.37pct to -0.3%; 4) Asset disposal yield increased by 0.08pct to 0.08%.
There was a slight increase in gross margin in the first quarter, and the expense ratio declined year-on-year. 2023Q1 gross margin increased 0.01 pct to 10.84%, and the cost rate for the period decreased 0.6pct to 7.14%. Among them, sales, management, R&D, and financial expenses rates increased 0.06pct, -0.32pct, and -0.08pct.-0.26pct to 0.35%, 3.08%, 1.22%, 2.49%; other returns also decreased 0.01pct to 0.04%; net return on investment decreased 0.52pct to -0.46%; asset impairment loss also decreased 0.37pct To -0.3%; the credit impairment loss rate increased 0.39 pct to -0.18%; the asset disposal yield increased 0.08 pct to 0.08%; the net exchange rate was the same as the same period last year; the income tax rate increased 0.83 pct to 21.34%; the imputed net interest rate remained the same as the same period last year, and net interest rate increased 0.31pct to 2.3% after deducting unvested net interest rate.
The decrease in cash outflow from PPP projects led to a year-on-year improvement in operating cash flow. The net operating cash outflow of the Q1 company was 1,565 million yuan, a year-on-year decrease of 2,513 billion yuan. The payout ratio increased by 18.02 pct and -0.78 pct to 144.81% and 156.93%, respectively. As of 2023Q1, the company held $32.227 billion in notes and accounts receivable, and $37.45 billion in inventory and contract assets, up -11.63% and 1.57% respectively from the beginning of the year; payables, advance payments and contract liabilities changed -18.82% and 29.54% respectively from the beginning of the year to $37.793 billion and $14.755 billion.
The number of new orders signed increased dramatically in '22, and the business structure is expected to be optimized. 1) In 2022, the company achieved new contracts of 132,736 million yuan, an increase of 74.87%, of which infrastructure projects and investments of 82,968 billion yuan increased 84.96%, municipal projects of 34.899 billion yuan increased 46.57%, water conservancy projects of 5.995 billion yuan decreased 10.66%, port and aviation projects increased 21.50% of 509 million yuan, housing construction projects increased 5.808%, and other projects of 853 million yuan increased 736.27%; by region, the amount of new contracts signed in the Hefei region was 45,458 million yuan, an increase of 73.458 billion yuan, a year-on-year increase of 45.458 billion yuan, a year-on-year increase of 45.458 billion yuan, a year-on-year increase of 45.458 billion yuan, a year-on-year increase of 45,458 million yuan, an increase of 73.458 billion yuan over the same period last year. 133.35%; New contracts signed within and outside the province amounted to 73.957 billion yuan, an increase of 95.68% over the previous year; in Q1 2023, a new contract amount of 38.452 billion yuan was signed, an increase of 16.56% over the previous year, of infrastructure of 26.345 billion yuan, a year-on-year increase of 26.31%, and housing construction of 12.107 billion yuan, a decrease of 0.19% over the previous year; 2) Based on the existing main business, promote the integrated utilization of resources and industrial transformation and upgrading, actively explore new fields such as urban operation, ecological and environmental protection, mining materials, etc., and actively explore green energy projects such as pumped storage power plants and photovoltaic buildings. It also put into operation 6 prefabricated construction bases and 1 is under construction. The total design capacity has reached an annual output of 520,000 square meters of components, 160,000 square pipes, and 130,000 tons of bridge steel structures. It is expected to contribute more profits as production and operation gradually mature. In 2023, the company plans to achieve operating income of about 90 billion yuan, an increase of about 12.3% over the previous year; achieve a total profit of about 2.6 billion yuan, an increase of about 12.9% over the previous year. Looking at the whole year, the company is expected to continue its high growth rate, benefiting from the continued rapid development of infrastructure in Anhui Province and the continuous implementation of policies related to steady growth. It is estimated that in 2023 and 2024, the company will achieve net profit attributable to the company of 1,660 million yuan and 1.99 billion yuan respectively, corresponding to the current stock price of PE, 6.2 and 5.2 times, respectively, and a “buy” rating.
Risk warning
1. Policy progress falls short of expectations;
2. Prices of raw materials fluctuate greatly.