23H1 performance declined slightly, but profitability continued to improve
China Express announced its 2023 annual report. 23H1 achieved operating income of 16.67 billion yuan, a year-on-year decrease of 9.3%; realized net profit of 1.82 billion yuan, a year-on-year decrease of 5.7%; and earnings per share of 0.17 yuan. The company's profitability continued to increase. 23H1 gross margin was 25.0%, up 1.8 percentage points from the previous year; the net profit margin was 12.7%, up 0.8 percentage points from the previous year.
The core railway sector achieved a slight increase in revenue, and the overseas market performed well
23H1's railway/urban rail/urban rail/engineering general contracting revenue was 887/3.9/3.13 billion yuan respectively, a year-on-year change of +4.9%/-17.8%/-30.2%, respectively. In terms of the high-speed rail weak current system integration business, the country opened bids for 5 projects in the first half of the year. The company undertook 4 projects, including Xiongxin, Yuqian, Guangzhan, Guangfo section, and the Shanghai-Yurong Hanhan section, with a market share of 81%. In the field of urban rail traffic signal system integration, the company has achieved a market share of 42% and continues to maintain a high leading edge.
23H1's overseas business achieved revenue of 590 million yuan, an increase of 6.6% over the previous year. Relying on the unique advantages of the “trinity” of design and development, equipment manufacturing and engineering services in the entire industry chain, the company continues to promote the progress of overseas projects such as the Nosu section of the Hungarian project and the Yawan high-speed rail project. At the same time, the amount of new external contracts signed has increased significantly over the same period last year. The company will continue to rely on key regions and countries along the “Belt and Road” to make every effort to promote the implementation of key projects and further enhance the level of overseas business underwriting.
Orders on hand are full, and overseas orders are growing rapidly
23H1 Company signed a total of 31.67 billion yuan of new contracts, up 10.5% year on year; of these, the railway sector was 9.78 billion yuan, up 30.2% year on year; the urban rail sector was 5.85 billion yuan, down 9.6% year on year; the overseas sector was 1.38 billion yuan, up 2390.1% year on year; general engineering contracting and other fields were 14.66 billion yuan, up 0.2% year on year, and the contract structure was optimized. By the end of the first half of 2023, the company had orders of 152.28 billion yuan, which is at an all-time high. With the rapid recovery of rail traffic and the further expansion of overseas markets, it is expected that more order demand will be generated in the future.
Maintain a “buy” rating
We are optimistic about the recovery of rail traffic and the increase in demand brought about by the expansion of overseas markets; the company's orders are full, and future profit growth is expected to correct. Maintain the company's 23-25 EPS forecast of 0.38/0.42/0.45 yuan. Maintain the company's A and H share “buy” ratings.
Risk warning: the risk of increased competition in the industry, the risk of fluctuation in China Railway investment, the risk of a decline in the urban rail boom, and the risk of poor progress of overseas projects