Description of the event
The company disclosed that for the third quarter of 2023, the first three quarters achieved operating income of 285.313 billion yuan, an increase of 18.00% over the previous year; imputed net profit of 3,073 billion yuan, a decrease of 26.72% over the previous year; and net profit attributable after deduction of 2,885 billion yuan, an increase of 1.45% over the previous year.
Incident comments
The company's revenue alone maintained double-digit growth in the third quarter, and overall growth in the first three quarters was steady. The company achieved revenue of 285.313 billion yuan in the first three quarters, up 18.00% year on year; revenue for the third quarter alone was 93.193 billion yuan, up 11.61% year on year.
Affected by the decline in profitability of the cement and real estate business, the company's comprehensive gross margin for the third quarter fell slightly year on year. Expense ratio increased during the period, and overall profitability declined year on year. The company's comprehensive gross profit margin for the first three quarters was 10.95%, up 0.47pct year on year. Looking at the third quarter alone, the company's comprehensive gross profit margin was 10.98%, down 0.21pct year on year; in terms of expense ratio, the company's expenses rate for the first three quarters was 7.70%, down 0.23pct year on year. Among them, sales, management, R&D and financial expenses changed year-on-year by -0.04, -0.16, 0.35, 0.07pct to 0.45%, 3.63%, 2.43%, and 1.19%, the cost rate for the third quarter increased 8.57% year on year, year on year 0.80 pct. Among them, sales, management, R&D, and financial expense ratios changed year-on-year by -0.05, -0.02, 0.48, and 0.39 pct to 0.48%, 3.82%, 2.96%, and 1.31%, respectively. Overall, the company's net profit rate for the first three quarters was 1.08%, down 0.66pct year on year, down 0.66pct year on year, down 0.16pct year on year; net profit margin attributable after deduction was 1.01%, down 0.16pct year on year; net profit margin for the third quarter was 0.45%, down 1.21pct year on year, down 0.58% year on year, down 0.71 pct year on year. In summary, although there was slight pressure on the company's operations in the third quarter, on the basis of the operating quality of the first half of the year, non-attributable net profit in the first three quarters still achieved positive year-on-year growth; at the same time, impairment losses continued to be calculated, but the scale was drastically reduced compared to the second quarter. The company's asset impairment and credit impairment in the third quarter were 0.3 billion yuan and 0.3 billion yuan respectively (1.0 billion yuan and 580 million yuan in the second quarter). With the gradual deepening of impairment calculation, the risks associated with the company may have been relatively clear, reducing the pressure on subsequent growth.
The company's cash flow improved year over year. The year-on-year cash flow outflow rate for the first three quarters narrowed, and the revenue ratio declined slightly. The company's net cash outflow from operating activities in the first three quarters was 14.747 billion yuan, a year-on-year decrease of 3.805 billion yuan, a year-on-year decrease of 86.75%, a year-on-year decrease of 1.79 pct; in the third quarter alone, net cash outflow from operating activities was 1,115 billion yuan, a year-on-year decrease of 3.644 billion yuan, a year-on-year decrease of revenue ratio of 89.59%, a year-on-year decrease of 9.61 pct; in addition, the company's balance ratio increased 1.65 pct to 76.69% year on year. The number of days of turnover of accounts receivable increased 4.44 to 78.45 days year on year.
The company's orders grew rapidly in the first three quarters, overseas business continued to advance, and the transformation of new energy sources was implemented at an accelerated pace. The company signed a total of 941.5 billion yuan in new orders in the first three quarters, an increase of 35.53% over the previous year. Among them, new energy and integrated smart energy signed 403.3 billion yuan, an increase of 29.09%, accounting for 42.8%. It was the largest project among the new orders. Traditional energy signed a new contract of 169.9 billion yuan, an increase of 12.18% over the previous year, urban construction signed 188 billion yuan, an increase of 54.99%, and a total of 877.8 billion yuan, an increase of 33.59% over the previous year. By region, the company's domestic orders were 718.18 billion yuan, up 45.20% year on year, while overseas orders were 223.325 billion yuan, up 11.62% year on year. The company is expected to benefit fully from engineering growth driven by the development of new power systems in the future. The company is expected to achieve net profit of 73.62 billion yuan and 8.670 billion yuan in 2023 and 2024, corresponding to the current closing price PE of 12.57 and 10.68 times, respectively, with a “buy” rating.
Risk warning
1. New energy development falls short of anticipated risks;
2. Risks of international operations.