On January 24, the company announced its full-year performance forecast for '23. The company achieved net profit of 3.38 billion yuan to 3.62 billion yuan (+46.6% to 57.0% year over year) and net profit after deduction of 22.7 to 2.42 billion yuan (+75.6% to 87.2%); of these, Q4 achieved net profit to mother of 525 to 765 million yuan (+283% to 458% year over year) in a single quarter, in line with market expectations.
Overseas share increased, costs reduced and efficiency increased, and profitability increased dramatically from month to month. According to the announcement, 23Q1-Q3's gross profit margin and net interest rate reached 27.76%/8.62% respectively, up 6.79/1.39 pcts. The significant increase in profitability was mainly due to: 1) Increased share of overseas revenue and strong profitability: According to the announcement, 23H1's overseas gross margin was 5.96pcts higher than domestic, boosting the overall gross profit margin; 2) Smooth cost reduction: The company improved construction quality and reduced comprehensive costs through new materials for dry-mixed mortar. We are optimistic that the company's profitability will remain high. We expect the company's gross margin to be 26.7%/27.1%/27.0% for 23-25.
Products have achieved diversified development, and excavators, high machinery, and agricultural machinery are developing rapidly. According to the announcement, 23H1 earthmoving machinery and high machinery each achieved 29.3/3.36 billion yuan, +30.2%/26.3%. The revenue share of the above two fields increased by 12.18%/13.95%, and the revenue share increased by 5.25/2.64pcts respectively, promoting the diversified development of the company. Among them, the earthmoving machinery sector progressed rapidly, adhering to the medium and large excavation strategy, and continued to increase its market share, achieving countercyclical growth in the domestic small-scale cycle of the excavator industry.
The share of overseas revenue has increased dramatically, and the share of overseas revenue has increased dramatically. The company has actively laid out overseas markets in the past two years, implemented a “two vertical and two horizontal” strategy, and promoted “Belt and Road” countries, and exports of core products increased rapidly. According to the announcement, 23Q1-Q3's overseas revenue reached 13.029 billion yuan, +100.53% over the same period. It is expected that it will still maintain a high export growth rate throughout 23, and currently the company's market share in overseas markets is still at a low level, and there is still plenty of room for import substitution in the future.
We adjusted the profit forecast according to the announcement. We expect the company's revenue for 2023-2025 to be 482.94/624.00/77.911 billion yuan, and net profit to mother of 35.29/50.98/6.525 billion yuan. The corresponding PE is 18/12/10X, maintaining the “increase in holdings” rating.
Demand for downstream real estate and infrastructure falls short of expectations, increased competition in overseas markets, risk of rising raw material prices, and risk of exchange rate fluctuations.