Core views:
23Q3 performance continued to grow at a high level. The company released its three-quarter report. In the third quarter of 2023, it achieved operating income of 4.998 billion yuan, an increase of 25.9% over the previous year; net profit of 570 million yuan, an increase of 45.9% over the previous year. Revenue for the first three quarters of 2023 was 15.837 billion yuan, up 36.5% year on year; net profit was 1,772 billion yuan, up 36.7% year on year. Revenue for the first three quarters and net profit both exceeded last year's full year level.
Profitability increased significantly in 23Q3. 23Q3 The company's gross profit margin was 29.5%, up 7.4pct year on year; net profit margin was 10.9%, up 1.3 pct year on year. In the first three quarters of 2023, the company's gross profit margin was 27.2%, up 3.9 pct year on year, and the gross profit margin of overseas business was 29.6%; net profit margin was 10.9%, down slightly 0.2 pct year on year. The main reasons for the increase in profitability in 23Q3 are overseas businesses with high gross margins and a marked increase in the share of logistics equipment in electrified and intelligent ports.
The internationalization strategy has achieved remarkable results, and electrified intelligent products seize opportunities in overseas markets. 2023H1's overseas revenue increased sharply by 68.3% year on year, and overseas revenue accounted for 29.9%, up 4.7 pct year on year. On the business side, in the first three quarters, the company won the bid for the Southeast Asia Port Group's automated double trolley shore bridge, and the electric front crane and electric stacker successfully entered the high-end European and American markets.
Acquire Sany Petroleum Technology to expand energy equipment business segments. On April 12 of this year, the company announced that it plans to acquire all of Sany Petroleum Technology's Hong Kong shares at a discount of $2.98 billion (the full equity valuation value of this asset is $4.281 billion), which will be consolidated after the acquisition is completed on June 10. Sany Petroleum Technology is the absolute leader in domestic vehicle-mounted fracturing equipment, and the fracturing market space is vast. According to data from the ECF International Shale Gas Forum, the total capital expenditure for “three barrels of oil” in 2023 is expected to exceed 500 billion yuan, and China's solid pressure equipment market is expected to exceed 10 billion yuan in 2025.
Profit forecasts and investment advice. The company's 23-25 EPS is expected to be 0.76/1.03/1.35 yuan/share. Considering that the company's fundamentals are superior to comparable companies, it will maintain a reasonable value of HK$11.12 per share and maintain a “buy” rating.
Risk warning: There is a risk that upstream prosperity will decline, shipping freight will rise sharply, and the exchange rate will fluctuate greatly.