Matters: the company released the three-quarter report of 2023, the company achieved operating income of 1.872 billion yuan in the first three quarters of 2023, an increase of 24.62% over the same period last year, and a net profit of 203 million yuan, a decrease of 0.92% over the same period last year.
The economic downturn affects the progress of downstream investment, and 2023Q3 revenue growth slows down. The company's 2023Q1-Q3 achieved operating income of 1.872 billion yuan, an increase of 24.62% compared with the same period last year. The revenue growth rate of each quarter was 42.79%, 31.44% and 7.03%, respectively. The revenue growth rate of the company Q3 slowed down mainly or due to the economic pressure, the progress of fixed investment by downstream customers slowed down, industry competition intensified, project implementation and receipt confirmation were delayed, and the company was more cautious in project acceptance from a risk point of view. According to the company announcement, the company has sufficient orders on hand, light storage and other new business orders are progressing smoothly, and the overseas business development has been completed, laying the foundation for long-term revenue growth.
The decline in gross profit margin is a drag on performance growth, and the expense rate fell year-on-year during the period. In the first three quarters, the company achieved a net profit of 203 million yuan, while yoy-0.92% and Q1/Q2/Q3 achieved a net profit of 203 million yuan, yoy+127.64%,-35.47% and-33.41%, respectively. The growth rate of the company's performance in the third quarter was lower than that of revenue growth, mainly because the decline in gross profit margin was affected by the delay in revenue and profit recognition of downstream engineering projects. 2023Q3 gross profit margin is 19.08% (year-on-year-11.04 pct), which is higher than Q2. During the period, the expense rate dropped to the 2020-2021 level, with 2023Q1-Q3 of 9.69%, compared with 11.57% in the same period last year. The operating cash flow improved in the first three quarters compared with the same period last year, and the net outflow of 2023Q1-Q3 was 228 million yuan compared with the same period last year, narrowing by 138 million yuan compared with the same period last year.
The expansion outside the province has achieved outstanding results, the layout of the whole industry chain is perfect, and the proposed buyback shows confidence in development.
According to the China News, the expansion of the company's business outside the province has continued to accelerate, and the revenue of 2023H1 outside the province has increased by 78.55% compared with the same period last year, accounting for more than 30% (30.46%, + 7.15 pct compared with the same period last year). The company's EPCOS business model has achieved the coverage of the whole industry chain, the traditional power supply and distribution project has developed steadily, and the equipment business has grown at a high speed. In the first three quarters, equipment revenue accounted for 38%. At the same time, it has expanded the emerging photovoltaic, energy storage, charging piles and other businesses, delivered and undertaken a large number of distributed photovoltaic projects, optical storage and charging projects have officially landed, and the new business is growing rapidly. In the link of operation and maintenance, the company has been engaged in intelligent power consumption business for many years, independently developed the power operation and maintenance platform, and formed a certain market competitiveness in the field of power demand side services. The advantage of one-stop power supply service is outstanding, bringing long-term continuous business increment. According to the announcement, the company's controller, chairman and general manager suggested that the company should buy back some of the shares, which will be used for employee stock ownership plans or equity incentives in the future, demonstrating the management's confidence in the development of the company.
Investment suggestion: the company is the leader of customer-side high-quality power engineering and operation and maintenance service provider, with sufficient orders on hand, remarkable results in national layout, rapid growth of power equipment and new energy business, and outstanding competitiveness of power grid intelligent sector. it is expected to fully benefit from the expansion of power grid investment, photovoltaic and energy storage demand release and the promotion of power grid intelligent operation and maintenance promoted by the construction of new power system. We are optimistic about the company's whole industry chain expansion strategy and long-term development. Affected by the domestic economic situation, the company's engineering business revenue and profits have slowed down in the first three quarters, and we have adjusted the company's revenue and performance forecasts. The company is expected to achieve operating income of 3.028 billion yuan, 3.876 billion yuan and 4.984 billion yuan respectively from 2023 to 2025, an increase of 28.4%, 28.0% and 28.6% respectively over the same period last year. The net profit of returning to the mother was 307 million yuan, 396 million yuan and 512 million yuan, up 19.9%, 28.7% and 29.4% respectively over the same period last year, and PE was 20.5,16.0 and 12.3 times respectively. Taking into account the delayed recognition of the performance may be accelerated, the stack company has sufficient orders on hand, light storage and other new business orders are progressing smoothly, giving 2024 PE 20 times, with a target price of 38.35 yuan, maintaining the company's "buy-A" investment rating.
Risk tips: policy promotion is not as expected, macro-economic fluctuations, industry competition intensified, project progress is not as expected, project payback risk.