Core views
The company released its 2023 annual report, and its performance grew steadily by 13.2%. Gross sales margin increased 2.3 pct year-on-year, and net cash flow from operating activities reached 1.23 billion yuan, a significant increase. The increase was mainly due to strengthened repayment management and an increase in customer repayments. The high number of tenders for the 2023 power grid led the company to maintain steady growth in its secondary network business; the company's new energy business benefited from a high increase in wind power and photovoltaic installed capacity in the context of rapid clean energy construction. The company is deeply involved in the smart grid business, vigorously developing new energy and energy storage businesses, and will continue to benefit from the strong demand brought about by the boom in the power equipment industry.
occurrences
The company released its 2023 annual report, achieving operating income of 5.751 billion yuan, an increase of 13.24% year on year; net profit to mother of 627 million yuan, up 15.46% year on year; net profit after deducting non-return to mother of 623 million yuan, an increase of 17.77% year on year.
Among them, revenue for the fourth quarter was 1,514 billion yuan, up 2.39% year on year; net profit to mother was 106 million yuan, up 1.05% year on year, and net profit without return to mother was 105 million yuan, up 1.14% year on year.
Brief review
2023 performance continues to grow steadily
1) Revenue for the full year of 2023 reached 5.751 billion yuan, up 13.24% year over year. Net profit attributable to mother/net profit not attributable to mother was $627/623 million, respectively, up 15.46%/17.77% year over year. Looking at the performance side, the overall trend of steady growth will be maintained in 2023.
2) Revenue for the fourth quarter of 2023 was 1,514 billion yuan, up 2.39% year on year and 10.8% month on month. Net profit attributable to mother/net profit not attributable to mother was $1.06/105 million respectively, up 1.05%/1.14% year on year, and down about 36.4%/35.7% month on month. The forecast is a fluctuation in the pace of revenue recognition in Q4.
Gross margin continued to recover, cash flow increased significantly, and R&D investment continued to grow 1) Gross margin restoration: comprehensive gross margin reached 34.44% in 2023, up 2.29pct year on year; Q4 gross margin was 29.26%, up 2.32pct year on year. It is expected that the growth rate of high-margin products will be impressive, and that efforts to reduce costs and increase efficiency will drive up the overall gross profit margin.
2) Outstanding cash flow performance: In 2023, the company's net cash flow from operating activities reached 1,233 million yuan, an increase of 73.63%; Q4 net cash flow from operating activities was 852 million yuan, an increase of 60.20% over the previous year. Mainly companies continue to strengthen repayment management, and customer repayments have increased.
3) High-intensity R&D investment: R&D expenses reached 541 million yuan, an increase of 27.22% over the previous year. The R&D cost rate was 9.4%, an increase of 1.0 pct over the previous year. The company has established a complete R&D innovation management system, always maintaining high R&D investment, consolidating technological leadership, and expanding new businesses and new products.
Deepen the steady growth of power grids, continue to explore the new energy market, and actively promote international development 1) The company continues to deeply cultivate power grids, ranking second in the market share of secondary relay protection equipment. In the first batch of tenders for the transmission and transformation project of the State Grid headquarters in 2024, the relay protection and substation monitoring system business won a bid amount of more than 54 million yuan, accounting for about 13%, ranking second.
2) The high increase in the installed capacity of new energy sources has driven the company's business growth. By the end of 2023, the total installed capacity of solar energy was 217 GW, an increase of 148% over the previous year; the total installed capacity of wind power was 75.9 GW, an increase of 102% over the previous year. New energy installations maintain a high growth trend, and the company's off-grid power generation side business will continue to benefit.
3) Continued breakthroughs in the international market. The company actively promotes international development strategies, continues to take root in overseas markets such as Southeast Asia and Africa, won bids for the Tabela Hydropower Project in Pakistan, fully delivered the ADMS project in Nairobi, Kenya, etc., and further obtained application practices in the international market; it will also strengthen overseas localization strategies and enhance the localization market and service capabilities of international business.
Performance forecasts
The company's net profit for 2024 and 2025 is estimated to be 73/85 million yuan, PE 17.5/15.0x.