Event: The company released its report for the third quarter of 2023. 2023Q1-3, the company achieved revenue of 285.313 billion yuan, yoy +18.0%, net profit of net profit/deduction of non-net profit of 30.73/2,885 billion yuan, yoy -26.7%/1.5%. In the 23Q3 quarter, we achieved revenue of 93.193 billion yuan, yoy +11.6%, net profit of 416.537 billion yuan, net profit of 416.537 billion yuan, yoy -70.0%/-50.2%.
Dragged down by cement and real estate businesses, 23Q3 net profit was under pressure
23Q1-3, the company achieved revenue of 285.313 billion yuan, yoy +18.0%, net profit from mother, net profit from net income of 30.73/2,885 billion yuan, yoy -26.4%/+1.5%. On a quarterly basis, 23Q1/Q2/Q3 revenue was 885.16/ 1036.04/93.93 billion yuan, yoy +24.2%/19.1%/11.6%, net profit of 11.31/ 15.26/ 416 billion yuan respectively, yoy +17.8%/-17.8%/-17.4%/-70.0%, net profit of 10.23/ 13.25/ 537 billion yuan, yoy +22.1%/44.9%/-50.2 %. In 23Q3, the company's net profit was under pressure, mainly affected by the market, and the profitability of the cement and real estate business declined.
23Q3 Consolidated gross margin declined slightly, and operating cash flow improved
In terms of gross profit: 23Q1-3, the company's gross profit margin is 10.95%, yoy+0.47pct; on a quarterly basis, 23Q1/Q2/Q3, gross margin is 10.06%/11.68%/10.98%, respectively, yoy-0.41/+1.88/- 0.21pct.
Expense aspects: 23Q1-3, company period expense rate 5.28%, yoy-0.13pct, sales/management/finance/R&D expense ratio is 0.45%/3.63%/1.19%/2.43%, yoy-0.04/-0.16/ +0.07/+0.35pct; 23Q3, company period expense rate 5.62%, yoy+0.32pct, sales/management/finance/R&D expense ratio is 0.48%/3.82%/1.31%/2.96%, yoy- 0.05/-0.02/+0.39/+0.48pct.
In terms of cash flow: 23Q1-3, the company's net operating cash flow was -14.747 billion yuan, a year-on-year decrease of 3.807 billion yuan; in 23Q3, the net operating cash flow was -1,115 billion yuan, a year-on-year decrease of 3.646 billion yuan.
Short-term benefits from broad domestic photovoltaic power generation space, strong overseas demand, and medium- to long-term hydrogen energy and energy storage to create new drivers? Short-term view: Looking at market space, domestic wind power, photovoltaics, and new energy installations are increasing, and thermal power approval is speeding up. 23M10, the number of newly started/newly approved thermal power plants nationwide was 28.4/4.7 GW, 23Q1-3, and the approved installed capacity of domestic sea breezes reached 10.1 GW, up from 7.2 GW for the full year of 2022; the “Belt and Road” countries along the “Belt and Road” have strong demand for energy and power construction. On October 17, the “Belt and Road” Entrepreneurs Conference was held, which was one of the largest events of the 3rd “Belt and Road” International Cooperation Summit Forum. The amount of cooperation signed by China Energy Construction exceeded 10 billion US dollars, involving more than 20 countries including Russia and Saudi Arabia, covering photovoltaic power plants, wind power, wind power, etc. It can wait for various business types; looking at the new signing end, 23Q3, the company's new sign-off amount was 295.576 billion yuan, an increase of 82.59% over the previous year. By business, the company's new signings for traditional energy/new energy and integrated smart energy/urban construction were 443.91/1269.79/77.409 billion yuan, respectively, -32.69%/102.16%/426.16% over the previous year; by region, new domestic and foreign signings were 2318.29/63.747 billion yuan respectively, up 120.36%/12.48% from the previous year.
Medium- to long-term view: The company's hydrogen energy and energy storage business is advancing at an accelerated pace, and the advantages of the entire industry chain are highlighted. On October 17, 2023, China Energy Construction's first 1500 standard square alkaline electrolyzer was officially launched. The electrolyzer has the characteristics of safety and reliability, high power, low power consumption and high dynamic response. Under rated operating conditions, the DC energy consumption is 4.3 kilowatt-hours of hydrogen per standard, which is superior to the industry average. A single product is expected to save 800,000 kilowatts of electricity per year.
Profit forecast and investment recommendations: The company's 2023-2025 operating income is expected to be 4323.23, 4970.78, and 569.145 billion yuan, up 17.99%, 14.50% year on year, and net profit of 88.34, 102.60 billion yuan, and 11.952 billion yuan, up 13.12%, 16.14%, 16.50% year on year, corresponding to EPS of 0.21, 0.25, and 0.29 yuan. The current price corresponding to PE is 10.38, 8.94, and 7.67 times. Maintain a “buy” rating.
Risk warning events: the company's new energy investment fell short of expectations; the growth rate of thermal power investment fell short of expectations; the development of energy and power construction business in countries along the “Belt and Road” fell short of expectations.