Event: The company achieved revenue of 285.313 billion yuan in the first three quarters of 2023, an increase of 18.00%, net profit of 3,073 billion yuan, a decrease of 26.72%, and net profit of 2,885 billion yuan after deducting non-return net profit of 2,885 billion yuan, an increase of 1.45% (mainly due to non-current asset disposal income of 1,539 billion yuan in the first three quarters of 2022 and a decrease of 94.07% in non-current asset disposal income in the first three quarters of 2023). The comments are as follows:
Q3 The decline in net profit in a single quarter was mainly affected by cement/real estate. On a quarterly basis, the company's 2023Q1, Q2, and Q3 single-quarter revenue was +24.19%, +19.07%, and +11.61%, respectively; net profit was +17.83%, -17.39%, and -70.01%, respectively; net profit after deducting non-return net profit was +22.12%, +44.93%, and -50.10%, respectively. The decline in profit was mainly affected by the market. The decline in profitability of cement and real estate businesses was mainly affected by the market.
The gross profit margin and expense ratio have risen, and the sharp increase in impairment has led to a decline in net interest rates, and an improvement in cash flow. In terms of gross margin, the company's gross margin for the first three quarters of 2023 increased by 0.47 pct to 10.95%, with gross margin falling 0.22 pct to 10.98% in the Q3 single quarter. In terms of the period expense ratio, the cost rate for the first three quarters of 2023 increased by 0.23 pct to 7.70%, of which the sales expense ratio also decreased by 0.04 pct to 0.45%, the management expense ratio increased by 0.19 pct to 6.06%, and the financial expenses rate increased by 0.07 pct to 1.19%.
In addition, the company lost 736 million yuan in asset impairment plus credit impairment in the first three quarters of 2023. Losses increased 92.63% year-on-year, accounting for 9.54% of the company's total profit; net investment loss was 116 million yuan, which turned into a loss compared to net investment income of 984 million yuan in the same period in 2022. Overall, the net interest rate fell 0.58 pct to 2.01%.
Net operating cash flow was 14.747 billion yuan, a decrease of 20.51% from the net outflow of $18.552 billion in the first three quarters of 2022; of these, revenue fell 1.79 pct to 86.75%, disbursements fell 1.51 pct to 91.14% from the same period, other cash related to operating activities was $3.468 billion, a decrease of 73.16%, and payment of other cash related to operating activities was $4,041 billion, a decrease of 79.82%. Furthermore, the company's weighted average ROE for the first three quarters of 2023 also fell by 1.59 pct to 2.96%.
In Q3, the number of new signings increased by 83% in a single quarter, and the development of new energy and new industries accelerated. In the first three quarters of 2023, the company signed new contracts of 941,555 billion yuan, an increase of 35.53%; of these, Q3 signed a new quarter of 295.576 billion yuan, an increase of 82.59%. In the first three quarters, domestic and overseas registrations amounted to 7181.8 billion yuan and 223.325 billion yuan respectively, up 45.20% and 11.62% respectively; of these, new registrations in Asia and Europe increased 39.7% and 18.7% respectively; the “Belt and Road” market signed 116.95 billion yuan, an increase of 39.1%. In the first three quarters, the company's new energy and integrated smart energy signed a new contract of 405.88 billion yuan, an increase of 28.6%, obtaining the investment and development target of wind and new energy of 16.132 million kilowatts; the investment completed 16.87 billion yuan, an increase of 93.3%. By the end of September, the company Scenery New Energy Holdings had a total installed capacity of 6.785 million kilowatts; 76 new energy industry investments were under construction, with a holding capacity of 12.2 million kilowatts. In terms of new industries, the company has made every effort to promote the compressed air energy storage business, stepped up the construction of a new technology demonstration project for high-altitude wind power generation, made important progress in the development of electrochemical energy storage batteries, and comprehensively expanded the hydrogen energy business, and established hydrogen energy research institutes and hydrogen energy industry companies successively. Furthermore, the company plans to raise no more than 14.850 billion yuan in capital from the non-public offering of A shares for new energy, energy storage and other projects, which are still progressing smoothly and in an orderly manner.
Earnings forecasts and ratings. The company is the leader in the entire energy and power industry chain. New energy and new industries are developing at an accelerated pace, orders are growing rapidly to support future performance, and fixed increases are progressing smoothly. We expect the company's 23-24 EPS to be 0.19 and 0.22 yuan respectively, giving a price-earnings ratio of 13-15 times that of 2023, a reasonable value range of 2.48-2.87 yuan, maintaining the “superior to the market” rating.
Risk warning. Downward investment risks, policy risks such as new energy, and risk of price increases in raw materials.