Net profit deducted from mother in 2023 was +14.4% year on year. Maintaining the “buy” rating, the company achieved revenue/net profit from non-return to mother of 135/17.7/1.78 billion yuan in 2023, +2.16%/+4.18%/+14.4% year-on-year. Net profit to mother was in line with the company's rapid performance report. We expect the company's net profit to be 1,882/19.82/2,064 billion yuan in 2024-2026, respectively (the value was 1,846/1.982 billion yuan 24-25 years ago). Comparatively, the company Wind unanimously expected PE to be 12x. Considering that the company is an industry leader, has a global layout, and has obvious advantages in scale and high-end, the company was given 14xPE in 24 years, with a target price of 12.65 yuan (previous value of 12.53 yuan), maintaining a “buy” rating.
The business structure continues to be optimized, focusing on the main asset-light design business. The comprehensive gross profit increased by 27.2% in 23 years, and the company's comprehensive gross margin was 27.2%, +0.95pct year over year. By business, survey and design/engineering general contracting and project management/engineering test inspection/supervision achieved revenue of 96.6/25.9/5.1/340 million yuan respectively, +17.8%/+17.0%/+13.3%, accounting for 71.5%/19.2%/3.8%/2.5%, gross profit margin of 31.5%/11.1%/25.4%/17.3%, compared to +0.6/-5.2/+2.1/+3.2pct. By region, China (excluding Hong Kong and Macau) achieved revenue of 13.1 billion yuan, +2.5% year-on-year, gross profit margin of 27.14%, and year-on-year +1.0pct. Other countries and regions achieved revenue of 437 million yuan, -6.8%, accounting for 3.2%, gross profit margin of 28.0%, and -0.26pct year over year. Under the favorable overseas economy and the company's “overseas priority” strategy, new overseas orders increased by more than 20% year-on-year in 23, which is expected to contribute a good growth point in the future.
Net interest rate to mother increased, and operating cash flow was under pressure in the short term
The cost rate for the 23-year period of the company was 9.01%, -0.23pct. Among them, the sales/management/R&D/finance expenses ratio was 1.81%/4.30%/4.05%/-1.15%, -0.10/-0.44/0.11/+0.20pct. The proportion of depreciation expenses in revenue was +0.08pct to 1.87% year on year. Under the combined influence, the company's net return interest rate in 2023 was 13.07%, +0.25pct year on year, and the net interest rate after deduction of non-return mother was 13.20%, +1.41 pct year on year.
The net operating cash inflow in 2023 was 0.1 billion yuan, a year-on-year decrease of 2.42 billion yuan. The main reason is that, on the one hand, settlement center deposits were transferred to bank deposits in 2022, which led to a high net operating cash flow base. On the other hand, some owners' repayments slowed and payments to private enterprises accelerated. The annual payment/payout ratio was 94.7%/113.6%, respectively, -24.2/+4.7pct.
Endogenous and epitaxial two-wheel drive consolidates CCCC Design's leading position in comprehensive design as a design platform under CCCC Group. Compared with other domestic listed design companies, the company's operations are steady, large-scale and high-end trends are obvious, and operating data such as profit margin, cost ratio, and cash flow are outstanding. Although the total growth rate of the domestic design market is slowing down, we believe that the company is expected to expand the field and increase its market share with leading advantages, while the overseas priority strategy is expected to provide an incremental development market. In the future, the company will implement a development strategy through both endogenous and extrinsic paths, which is expected to target the growth path of AECOM, a leading overseas design company in the long term.
Risk warning: Business integration risk after transaction completion, risk caused by macroeconomic cycle fluctuations, accounts receivable recovery risk.