The performance was in line with expectations. Due to the increase in the 2023Q3 fee rate, the net interest rate for the quarter fell slightly month-on-month. Dongfang Electric released its 2023 three-quarter report. The company achieved operating income of 44.77 billion yuan from 2023Q1-3, YOY +10.4%. Net profit for the mother was 2,912 billion yuan, yoy +16.5%, and net profit after deducting non-return mother was 2,689 billion yuan, yoy +25.96%. Among them, Q3 accrued asset impairment of 131 million yuan, and credit impairment recovered to 49 million yuan.
Among them, 2023Q3 achieved revenue of 14.85 billion yuan, QOQ -2.3%, YOY +17.5%, net profit of 910 million yuan, QOQ -7.5%, and YOY +25.3%. Achieved net profit of 870 million yuan, QOQ +0.6%, and YOY +24.9%.
The gross margin/net margin of 2023Q3 was 17.4%/6.5%, +0.3pct/-0.3pct month-on-month, respectively, and the sales/management/development/development/finance expense ratio was 2.5%/5.4%/4.3%/0.2%, respectively, -0.1/+0.9/+0.6/+0.9pct month-on-month. Considering that the company has plenty of orders in hand and is expected to steadily confirm revenue, we maintain our profit forecast. We expect the company's net profit from 2023-2025 to be 40.49, 51.82, and 6.215 billion yuan, and EPS of 1.30/1.66/1.99 yuan, corresponding to the current stock price PE of 11.6, 9.1, and 7.6, maintaining the “buy” rating.
New orders have been growing steadily, and multi-sector orders have been successfully obtained. According to the company announcement, the company achieved new efficiency orders of 56.368 billion yuan from January to August 2023, and new effective orders of 53.822 billion yuan in the first three quarters of 2022. Among them, new efficiency orders from January to August 2023 in the clean and efficient energy equipment sector increased by more than 35% compared to the first three quarters of 2022. In the context of the restarting of domestic thermal power construction, orders for the clean and efficient energy equipment sector, including thermal power equipment, have been steadily rising. It has successively won bids for various projects such as generators and power plant steam turbines for the Anhui Huainan Pingxu Power Plant Phase IV 2×1000MW ultra-supercritical coal-fired unit project, generators and power plant steam turbines for the 2×350MW thermal power project power plant in Lanzhou New Area. In addition, the company's wind turbine bidding projects have also won bids one after another, including wind turbine units and ancillary equipment procurement for the 1.2 million kilowatt offshore wind power project in Danzhou, Hainan, Datang, Hainan, China (second round), the bundled bidding project for 16 wind power projects including the Huaneng Tianzhen New Energy Industry Project (bid section 1), Huadian Kaisheng Mulei 40 well 800MW project (bid section 2), the Three Gorges Energy Tianjin Nangang offshore wind power demonstration project wind turbines and tower equipment, etc.
Risk warning: Power investment and construction fell short of expectations; order delivery fell short of expectations.