Description of the event
The company released its three-quarter report for 2023. Q1-Q3 achieved revenue of 59.93 billion yuan, an increase of 11.16%; attributable net profit of 1,064 million yuan, an increase of 14.46%. The net profit deducted from non-attributable net profit was 1,101 billion yuan, an increase of 27.01%.
Incident comments
The company's revenue performance increased steadily in the first three quarters, and net interest rates increased year over year. 2023Q1-Q3 revenue increased by 11.16%, performance increased by 14.46%, and attributable net interest increased by 0.05 pct to 1.77%, mainly due to: 1) gross margin increased by 1.15 pct to 11.6%; 2) other income increased by 153.694 million yuan to 32.97 million yuan; 3) asset disposal income increased by 12.099 million yuan to 12.6402 million yuan. Looking at the third quarter alone, total operating income was 22,458 billion yuan, up 11.0% year on year, imputed net profit was 408 million yuan, up 32.2% year on year, and non-attributable net profit was 391 million yuan, up 33.2% year on year. Looking at the third quarter alone, the company's net interest rate increased in the third quarter, and performance increased rapidly. In the third quarter, the company's total operating income was 22,458 billion yuan, up 11.04% year on year, imputed net profit was 408 million yuan, up 32.18% year on year, net interest rate increased 0.4 pct to 2.4% year on year, and imputed net interest rate increased 0.3 pct to 1.8% year on year.
The company's gross margin increased year-on-year in the first three quarters, and the expense ratio increased slightly. The gross margin of 2023Q1-Q3 increased by 1.15 pct to 11.6%, and the period fee rate also increased by 0.29 pct to 7.41%. Among them, sales, management, R&D, and financial expenses changed by 0.07 pct, -0.03 pct, 0.29 pct, -0.04 pct to 0.31%, 2.45%, 2.09% and 2.55%; other income increased by 153.694 million yuan to 32.97 million yuan; net investment income also decreased by 151,3969 million yuan to -139.911 million yuan ; Asset impairment losses increased by 42.2553 million yuan to 56.952 million yuan; credit impairment losses increased by 187.869 million yuan to 249.3013 million yuan; asset disposal income increased by 11,909 million yuan to 12.6402 million yuan; net exchange income remained the same; income tax rate remained the same; income tax rate increased 3.7 pct to 24.63%; imputed net interest rate increased 0.05 pct to 1.77%; net interest rate also increased by 0.23pct to 1.84%.
In terms of cash flow, operating cash flow for the first three quarters was positive year over year. The net operating cash inflow of Q1-Q3 was 112 million yuan, an increase of 1,228 million yuan over the same period last year. The ratio of receipt and payment decreased by 2.14 pct and 6.6 pct to 106.46% and 108.61% respectively.
As of 2023Q3, the company held 37.106 billion yuan of notes and accounts receivable, and 39.792 billion yuan of inventory and contract assets, up 1.75% and 7.92% from the beginning of the year. Payables, advance receipts and contract liabilities changed by -1.26% and 34.48% from the beginning of the year, respectively, to $45.967 billion and $15.317 billion.
The company's new orders have grown steadily, and in the future, it may fully benefit from the increase in policies such as water conservancy, debt reduction, and steady growth. 1) In terms of orders, a total of 101.52 billion yuan was signed in the first three quarters, an increase of 6.66% over the previous year. In the first three quarters, the company signed 63.177 billion yuan for infrastructure projects, up 10% year on year, and housing construction projects signed 38.343 billion yuan, up 1.58% year on year. Among infrastructure projects, new contracts for highways and bridges and municipal projects accounted for the largest share, with new contracts of 25.340 billion yuan and 34.716 billion yuan respectively, with year-on-year changes of -22.18% and 56.94%. Looking at the third quarter alone, infrastructure projects signed 9.796 billion yuan, a year-on-year decrease of 34.04%, and housing construction projects signed a new contract of 16.911 billion yuan, an increase of 33.34% over the previous year. 2) The company is deeply involved in the infrastructure (water conservancy) market, and may fully benefit from the addition of 1 trillion yuan of treasury bonds and possible subsequent steady growth policies. It is expected that the high growth rate will continue. Furthermore, policies related to debt conversion are also expected to improve the quality of its own operations. It is estimated that in 2023 and 2024, the company will achieve imputed net profit of 1,659 million yuan and 1,993 billion yuan, corresponding to the current closing price PE of 5.05 and 4.20 times, respectively, with a “buy” rating.
Risk warning
1. Policy progress falls short of expectations;
2. Prices of raw materials fluctuate greatly.