Incident: In 2023, the company expects to achieve net profit of 3.8-3.62 billion yuan, with a year-on-year increase of 46.57%-56.98%; the net profit after deduction is estimated to be 22.7-2.42 billion yuan, which is expected to increase 75.59%-87.20% year on year; the performance is in line with expectations.
The 2023 performance growth rate led the industry, and α attributes continued to stand out. In the fourth quarter of 2023, the company expects to achieve net profit of 525-765 million yuan, a year-on-year increase of 283.21%-458.39%; it is expected to achieve net profit of 0.92 to 58 million yuan after deduction, which is expected to increase 65.93%-121.48% year-on-year. In the third quarter of 2023, against the backdrop of a continued decline in industry sales, the company's domestic business resumed positive growth, and the company's export business revenue continued to double. The company's revenue and profit growth rate are leading the industry, and α attributes continue to stand out.
Overseas market expansion has achieved remarkable results. The company continues to deepen the end-to-end, digitized and localized overseas business system, promote the construction and layout of outlets in depth, continue to improve the overseas business operation control system, continuously strengthen the overseas support system of the division, and accelerate the expansion and upgrading of overseas R&D and manufacturing bases. The company's sales network, service quality, brand awareness, and user reputation are constantly improving globally. In 2023, the company made continuous breakthroughs in market layout in Turkey, Saudi Arabia, the United Arab Emirates, Malaysia, Australia, Spain, South Korea, etc., and product sales broke China's export records many times. The company has become the brand with the highest market share in the Middle East and Russian-speaking engineering crane markets, and tower cranes also maintain the number one market position in Turkey, India, South Korea and other countries.
The emerging business segment is growing rapidly. The high quality and steady growth of the company's emerging business segments such as excavators, aerial work machinery, and mining machinery also provided strong support for the company's performance growth. In the first three quarters of 2023, the company's earthmoving machinery market share grew by more than 100%, and Zhongda Excavation already ranked in the top three in the domestic industry; the market share of aerial work machinery ranked second in the domestic industry; mining machinery also continued to sell in batches, and recently launched the first self-developed 100-ton national chemical-electric drive mining dump truck, officially entering the high-end mining equipment market. The company's emerging business segments, such as excavators, aerial work machinery, and mining machinery, are developing rapidly. The market position continues to rise, and the revenue share of new business segments continues to rise, becoming a new engine for the company's performance growth.
The level of operation and management continues to improve, promoting the improvement of profitability. The company's world-leading Zhonglian Smart Industrial City has gradually been put into operation to further improve manufacturing efficiency and product quality. At the same time, it continues to improve operating efficiency and operational quality through measures such as applying new technologies, new materials, new processes, comprehensive end-to-end transformation, in-depth digital application, extreme cost reduction, and improving the self-control rate of key components. In the first three quarters, the company's gross margin reached 27.76%, up 6.79 pct year on year; net profit margin was 8.62%, up 1.39 pct year on year; the profit level was industry-leading, and profitability continued to increase.
Investment suggestions: The company's leading position in the construction machinery industry is stable, and the competitiveness of the core sectors of lifting machinery and concrete machinery continues to increase; emerging sectors such as excavators and aerial work platforms continue to gain strength; the company's national layout along the “Belt and Road” is gradually improving, and overseas revenue continues to grow rapidly. We expect the company's net profit to be 35.31/48.55/ 6.595 billion yuan in 2023-2025, respectively, and the corresponding PE is 17.72/12.89/9.49 times, respectively.
Risk warning: Investment in infrastructure and real estate falls short of expectations, irrational competition in the market, deterioration in the overseas trade environment, poor performance, etc.