Profit continues to grow relatively well, and is optimistic about medium- to long-term growth
The company released its annual report on 23. 23H1 achieved operating income of 1.01 billion yuan, -1.27% year-on-year, net profit of 82 million yuan, +13.77%, minus non-return net profit of 74 million yuan, +10.33%. Looking at a single quarter, 23Q2 achieved revenue of 583 million yuan, -8.52% year-on-year, and net profit of 0.48 billion yuan, +10.94%. 23H1 calculated asset and credit impairment losses of $18 million, an increase of 39 million yuan over the same period of 22H1 (22H1 surged back a total of $210 million over the same period). If the impact of impairment was excluded, 23H1's net profit was +96% over the same period. Considering that the company signed new orders +40% in '22 compared to the same period, we believe that the company's sufficient number of orders on hand is expected to support a high increase in performance throughout the year. Looking at the medium to long term, we believe that granary construction and cold chain logistics are still booming during the 14th Five-Year Plan period. At the same time, the company's gross margin may continue to benefit from an increase in the proportion of self-supplied equipment. Subsequent overseas business is also expected to gradually expand, and we continue to be optimistic about medium- to long-term growth.
The business structure continues to be adjusted, and gross margin has increased markedly
23H1's mechanical and electrical engineering system delivery/design consulting/equipment manufacturing/engineering contracting business achieved revenue of 4.4/2.2/2.8/37 billion yuan, respectively, +32.8%/-1.13%/-24.5%/-42.2%, gross margin was 13.66%/44.74%/20.21%/9.13%, respectively, and +4.28pct/+2.25pct/+3.98pct/+7.35pct, respectively. The gross margin of all businesses improved markedly, and profitability was relatively poor The share of EPC business has shrunk, driving up the company's overall profitability. Looking at the medium to long term, we think the share of the EPC business is expected to decline further.
Profitability has improved markedly, and the ability to control fees has been further enhanced
23H1's gross margin was 23.0%, year-on-year +3.22pct, period cost rate 12.37%, year-on-year -0.41pct. Among them, sales/management/development/finance expense ratios were 1.04%/7.07%/5.20%/-0.94%, year-on-year respectively, -0.11pct/-0.94pct/+0.79pct/-0.15pct. Despite a slight decline in revenue, the cost ratio still improved, reflecting a further increase in the company's fee-control capacity. 23H1 added a total of 18 million yuan in asset and credit impairment losses, an increase of 39 million yuan over the previous year. Under comprehensive influence, the company's net interest rate in '22 was +0.87 pct to 8.2% year-on-year. 23H1's net CFO amount was -195 million yuan, with a year-on-year outflow of 74 million yuan, a year-on-year increase of 0.74 million yuan, a year-on-year ratio of -14.91 pct to 104.8%, a payout ratio of -41.21 pct to 99.3% year-on-year, and a balance ratio of -2.71 pct to 45.18% year-on-year.
Optimistic about annual results unleashes momentum and maintains “buy” ratings
We believe that the company's gross/net interest rate is expected to continue to improve in the short term, and order carryover is expected to gradually be reflected at the revenue level in the second half of the year. In the medium to long term, it is expected to fully benefit from the accelerated construction of granaries and cold chain logistics bases in the 14th Five-Year Plan, with high performance flexibility. We maintain our previous profit forecast. We expect the company's net profit to be 2.9/38/5.1 billion yuan in 23-25, maintaining the “buy” rating.
Risk warning: The price of raw materials has risen sharply, the implementation of policy plans has fallen short of expectations, the increase in the proportion of self-supply equipment has fallen short of expectations, and the progress of overseas business development has fallen short of expectations.