Incidents: In the first three quarters of 2023, the company achieved revenue of 4.206 billion yuan, an increase of 10.68%; net profit of 197 million yuan, an increase of 13.15%; net profit after deduction of 180 million yuan, an increase of 2.19%. The comments are as follows:
Q3 Revenue accelerated, profit growth slowed, and new orders declined in the first three quarters. On a quarterly basis, revenue for the Q1, Q2, and Q3 quarters of 2023 increased by 9.78%, 8.79%, and 13.41%, respectively; net profit of the mother increased by 31.90%, 15.11%, and 0.70%, respectively. The amount of new contracts signed by the company in the first three quarters of 2023 was 5.644 billion yuan, a year-on-year decrease of 25.34%; among them, the amount of new orders signed for engineering general contracting business, design business, supervision business, and consulting business was -33.82%, -11.22%, +22.04%, and +3.97%, respectively.
By the end of the third quarter, the total amount of general contract projects that the company had signed for unfinished projects was 6.295 billion yuan, about 1.10 times the revenue in 2022; in addition, 2023Q3 had won the bid of 625 million yuan for unsigned general contracting projects. Overall, the company had sufficient orders in hand.
Net operating cash flow inflows decreased due to an increase in gross margin, an improvement in the period expense ratio, and a decline in receipts. In terms of gross margin, the company's gross margin increased 1.01 percentage points year-on-year to 13.74% in the first three quarters of 2023.
In terms of fee rate, the company's fee rate for the first three quarters of 2023 increased 2.09 percentage points year-on-year to 8.51%. Among them, the sales expense ratio increased by 0.35 percentage points to 0.53%; the management expense ratio (including R&D expenses) increased by 0.99 percentage points to 8.67%; and the financial expenses ratio increased by 0.75 percentage points to -0.69%.
The company recovered credit impairment losses and asset impairment losses totaling $23 million in Q1-Q3 in 2023, and impairment losses were reduced by $46 million. Net interest rates for the first three quarters of 2023 rose 0.10 percentage points year over year to 4.69%; ROE (weighted) increased 0.02 percentage points to 11.15%. In terms of cash flow, the net inflow of operating cash flow was $86 million, and the inflow decreased by 499 million yuan, a decrease of 85.33%. Among them, the cash to income ratio decreased by 26.86 percentage points to 100.20 percent, and the cash to cash ratio decreased by 9.91 percentage points to 82.48%.
Respond positively to the digital transformation and implement the dual-carbon development strategy, bringing new profit growth points. The company responded positively to the country's call for “digital transformation” and implemented the “double carbon” development strategy. The company completed the issuance of shares to specific targets in August 2023, raising capital of 413 million yuan to invest in the “Digital Transformation and Upgrading Construction Project” (364 million yuan) and the “Dual Carbon Science and Technology Innovation Center Project” (49 million yuan), respectively. The implementation of the “Digital Transformation and Upgrading Construction Project” will support the company to become a technology-based engineering enterprise with digital competitiveness through the construction of a digital design cloud platform, an intelligent operation and maintenance management platform, and a full-process project management collaboration platform based on EIM. The implementation of the “Double Carbon Science and Technology Innovation Center Project” will comprehensively and systematically carry out technical research related to “double carbon”, conduct research on carbon emission monitoring and management and green energy saving technology in the customer's manufacturing process, form the ability to systematically develop overall “low carbon and carbon reduction” solutions, and comprehensively enhance the company's “double carbon” technical service capabilities. The implementation of the two fund-raising projects will improve the company's operating efficiency and bring new profit growth points, providing strong support for the company's high-quality development.
Earnings forecasts and ratings. The leader in the light industry in the whole process is optimistic about the company's future growth prospects. We expect the company's 23-24 EPS to be 0.53 and 0.66 yuan respectively, giving a price-earnings ratio of 26-27 times in '23, and a reasonable value range of 13.78-14.31 yuan, maintaining the “superior to the market” rating. Risk warning. Payback risk, business development risk, policy risk.