2023 results are in line with our expectations
The company announced its 2023 results: revenue of 6.67 billion yuan, +40.50% year on year, net profit of 505 million yuan, +78.15% year on year, net profit after deducting non-return to mother of 481 million yuan, +104.92% year on year; of these, 4Q23 revenue was 1.89 billion yuan, +21.59% year on year, net profit to mother of 171 million yuan, +48.76% year on year. The company's 2023 results are in line with our expectations.
Domestic and overseas two-wheel drive, many downstream growth rates have performed brilliantly. In 2023, the company's domestic business revenue was 5.45 billion yuan, +34.5% year-on-year, and overseas business revenue was 1.18 billion yuan, +79.54% year-on-year. By sector, the company's dry transformation and complete equipment/energy storage/digital business revenue was $58.63/4.14/071 billion yuan respectively, +34.0%/+546.9%/-47.9% year-on-year. Looking downstream: 1) New energy sector: The revenue of the new energy sector was 3.723 billion yuan, or +68.2%, accounting for 55.8% of the company's main revenue, compared with +9.2ppt in 2023, of which wind power/photovoltaic/energy storage/others were +12.1%/+90.6%/+308.5%/+12.1%, of which energy storage transformers and complete equipment were +140.5% year over year. 2) Non-new energy sector: The sector's revenue was 2,833 billion yuan, +20.1% year over year. Among them, the growth rate of supporting industrial enterprises/important infrastructure/new infrastructure/residential housing was prominent, with +40.2%/+20.1%/+20.1%/+50.2% year-on-year.
There are plenty of on-hand orders, and profitability has increased significantly. In 2023, the company's overall sales order was 7.832 billion (excluding tax), +35.14% year on year, and overseas orders were 1,991 billion yuan, +119.18% year over year. In 2023, the company's profitability increased significantly, with gross margin +2.5ppt to 22.81% year on year, net margin +1.6ppt to 7.6% year over year, and ROE up about 5.73ppt year over year. We think it is mainly due to 1) a correction in raw material prices, 2) cost reduction and efficiency brought about by digital strength, and 3) structural changes brought about by the profitability of overseas products.
Development trends
Technology drives development, and I am optimistic that the company will take advantage of the wind and accelerate customer development. The company has strong technical strength and remarkable results in 2023: the 17MVA/66KV offshore wind power transformer was successfully launched; the engine room transformer and energy storage box were successfully developed and successfully hoisted for the China Resources project; successfully developed a 40.5kV inflatable ring network cabinet product for the world's first 16 MW offshore wind turbine and successfully connected to the grid; and provided a 200MW onshore cabin dry-type transformer for the Heilongjiang Huadian Ning'an Fengshui Mountain Wind Power Project. We believe that the company's brand, technical strength and advantages on the digital manufacturing side are remarkable, and it is expected that it will further increase its market share and brand influence at home and abroad, and that the mismatch between supply and demand may exceed expectations during the dividend period.
Profit forecasting and valuation
Due to the slowdown in the growth rate of new energy installed capacity, we lowered our 2024/2025 performance by -6.1%/-9.7% to 7.51/1,014 billion yuan. Considering the upward shift in the industry valuation center, it maintained an outperforming industry rating and a target price of 46.86 yuan. The current stock price corresponds to a price-earnings ratio of 23.7 times/17.5 times in 2024/2025, and the target price corresponds to a price-earnings ratio of 26.7/19.7 times in 2024/2025, with 12.6% upside compared to the current stock price.
risks
Geopolitical and trade policy changes, raw material prices fluctuate, and the installed capacity of new energy sources falls short of expectations.