The full-year results were in line with expectations, with a cash dividend of 500 million yuan. The company released its 2023 annual report. In 2023, the company achieved operating income of 5.751 billion yuan, a year-on-year increase of 13.24%, and realized net profit of 627 million yuan, an increase of 15.46% over the previous year. Annual gross sales margin of 34.44% (YoY +2.29pct.) , net profit margin of 10.84% (year-on-year +0.42pct.). In 2023, the company plans to distribute a cash dividend of 500 million yuan, accounting for 80% of net profit attributable to mother.
Fourth quarter results remained steady, and gross sales margin increased year-on-year. In the fourth quarter of 2023, the company achieved revenue of 1,514 billion yuan (+2.39% YoY, +10.78%), net profit to mother of 106 million yuan (+1.05% YoY, -36.35%), and gross sales margin of 29.26% (YoY +2.32pct). , month-on-month ratio - 7.43pct.) , net profit margin of 6.97% (year-on-year -0.09pct. , month-on-month ratio - 5.21pct.).
Secondary business volume within and outside the network increased rapidly, and the energy storage business achieved high-quality development. The company achieved grid automation revenue of 2,924 billion yuan, +11.01% year over year, gross profit margin of 41.89%, and +1.98 pct. Power plant and industrial automation revenue was $2,491 billion, +11.55% YoY, gross profit margin 27.54%, +2.77pct.
Other revenue was 322 million yuan, +61.87% YoY, gross profit margin 18.93%, +7.93pct. We estimate that other revenue mainly comes from the energy storage business, and the high level of gross margin reflects the company's steady and high-quality development concept.
Secondary technology for power grids has been deeply accumulated, and the demand for new types of substations is being deeply cultivated. In 2023, the company won the bid for the first 500kV secondary optimization demonstration station in Shandong and the first next-generation digital secondary integrated substation in Inner Mongolia, maintaining a leading position in next-generation high-reliability substation technology. The company has won a total of 55 next-generation centralized control stations from the State Grid and the Shenzhen 110kV Houhai three-digital twin smart substation project, leading technology in the field of intelligent transportation inspection and digital twins.
The scale of the new energy business continues to grow, and offshore wind power has outstanding advantages. In 2023, the company participated in 294 new energy projects (112 wind power, 182 photovoltaics), with a total capacity of about 27 GW (including 10 GW of wind power and 17 GW of photovoltaics). In 2023, the company helped the Mingyang Qingzhou Four Offshore Wind Power Project successfully connect to the grid, further enhancing the company's large-scale offshore wind power secondary equipment integration capabilities.
Risk warning: New energy installations fall short of expectations; competition in the online market intensifies.
Investment advice: Lower the profit forecast and maintain the “buy” rating.
The profit forecast was lowered in view of the changes in the Internet's internal security recruitment rules and the company's equity incentive cost situation. The company is expected to achieve net profit of 745/8.75/1,020 million yuan in 2024-2026 (the original forecast value for 24-25 was 813/973 million yuan), and the current stock price corresponds to PE 18/15/13 times, respectively, maintaining a “buy” rating.