Key points of investment
The first three quarters of 2023 achieved net profit of 4.948 billion yuan, a year-on-year increase of 17.2%. According to the company's three-quarter report, the first three quarters of 2023 achieved revenue of 143,035 billion yuan, an increase of 5.51% over the previous year; realized net profit of 6.152 billion yuan, an increase of 2.06% over the previous year; and net profit after deduction of 4.948 billion yuan, an increase of 17.2% over the previous year. 2023Q3 achieved revenue of 55.732 billion yuan, a year-on-year increase of 2.7%; net profit of 2,691 billion yuan, a year-on-year decrease of 7.09%; net profit after deducting non-return net profit of 2,365 billion yuan, an increase of 0.78% over the previous year.
Profitability: The gross margin for the first three quarters of 2023 was 21.82%, +1.24PCT year-on-year, and the net profit margin was 5.61%, -0.1PCT year-on-year. The gross margin for Q3 2023 was 22.94%, +1.69PCT yoy, and the net profit margin was 6.24%, y-0.52PCT yoy.
Cost side: The fee rate for the first three quarters of 2023 was 15.72%, +1.05 PCT over the same period last year. Among them, the sales expense ratio was 3.81%, +0.65PCT; the management expense rate was 6.37%, +0.15PCT; the financial fee rate was -0.03%, +0.21PCT year-on-year, mainly due to a decrease in exchange earnings; and the R&D fee rate was 5.58%, +0.05PCT year-on-year. For 2023Q3 alone, the sales rate was 3.43%, yoy +0.23PCT; management fee rate was 6.38%, yoy +0.49PCT; financial rate was 0.59%, yoy +0.95PCT; and the R&D fee rate was 5.72%, +0.25PCT yoy.
Railway equipment and new industries increased by 12.41% and 14.77% year-on-year respectively in the first three quarters. The signing of new orders accelerates the company's commitment to building a diversified business structure with rail transit equipment as the core and strategic emerging industries as the main focus.
First three quarters of 2023: (1) Railway equipment: revenue of 52.5 billion yuan (+12.41% year-on-year), accounting for 36.70% (+2.25PCT). Among them: EMU revenue is 21,658 billion yuan (+43.37% yoy), locomotive revenue is 16.459 billion yuan (+7.55% yoy), truck revenue is 11.615 billion yuan (-18.91% yoy), and bus revenue is 2,768 billion yuan (+40.37% yoy).
(2) Urban rail and urban infrastructure: Revenue was 30.118 billion yuan (-12.92% year-on-year), mainly due to a decrease in urban rail subway vehicle revenue, accounting for 21.06% of revenue (-4.45PCT). (3) New industries: Revenue of 55.923 billion yuan (+14.77% year-on-year), mainly due to increased revenue from products such as energy storage equipment and general components, accounting for 39.10% of revenue (+3.16PCT). (4) Modern service industry: Revenue was 4.494 billion yuan (-18.96% year-on-year), accounting for 3.14% of revenue (-0.96PCT). The decline in revenue was mainly due to a decrease in logistics business and leasing business revenue.
New orders accelerated: The company signed new orders of about 211.5 billion yuan in the first three quarters, a year-on-year increase of 18.75%, and a year-on-year increase of 60.59% in Q3 in a single quarter (up 3.67% year-on-year in the first half of the year). Among them, about 37.6 billion yuan of new international business orders were signed, an increase of 62.77% over the previous year.
Profit forecasting and valuation
The company's net profit for 2023-2025 is estimated to be 121.85, 130.74, and 14.70 billion yuan respectively, up 4.56%, 7.30%, and 7.62% year-on-year, corresponding to PE of 12, 12, and 11 times, maintaining the “buy” rating.
Risk warning: 1) EMU tenders fell short of expectations; 2) the commissioning of new railway lines fell short of expectations; 3) the “Belt and Road” and high-speed rail landing overseas fell short of expectations; 4) The development of new industries fell short of expectations