Full-year results declined slightly, but profitability continued to improve
China Express released its 2023 annual report. It achieved annual revenue of 37.00 billion yuan, a year-on-year decrease of 8.0%; realized net profit to mother of 3.48 billion yuan, a year-on-year decrease of 4.3%. The gross margin for the whole year was 25.8%, up 2.1 percentage points year on year; net profit margin was 10.9%, up 0.7 percentage points year on year, and the company's revenue structure continued to be optimized. The company plans to pay a dividend of RMB 0.17 per share, with a dividend ratio of 51.8%.
The revenue performance of the high-margin sector is outstanding, and the revenue structure continues to be optimized
In '23, the company's railway/urban rail/engineering general contracting achieved revenue of 19.2.5/85.3/7.67 billion yuan respectively, a year-on-year change of -0.4%/-0.6%/-28.5%. Affected by factors such as the macroeconomic downturn and the overall slowdown in national railway investment, the company's performance was under pressure in the short term. According to the division into different business segments, the equipment manufacturing and design integration segments with high gross margins of the company achieved revenue of 61.1/11.72 billion yuan respectively, an increase of 9.6%/20.2% over the previous year.
Overall, the company's revenue declined throughout the year, but the revenue structure continued to be optimized.
In '23, the company's overseas business achieved revenue of 1.49 billion yuan, a year-on-year decrease of 1.11%. Relying on the unique advantages of the “trinity” of design and development, equipment manufacturing and engineering services, the company undertakes key “Belt and Road” projects such as the Indonesian Yawan High Speed Rail, the Hungarian Railway, and the Thai Double Track Railway. At the same time, the signing ceremony for the Bangura-Nkaya renovation project in Malawi was successfully completed at the 3rd “Belt and Road” International Cooperation Summit Forum, successively receiving orders from Malaysia, France and other places.
Orders on hand are full, and overseas orders are growing rapidly
In 2023, the total number of new contracts signed by the company was 73.12 billion yuan, up 0.2% year on year; of these, the railway sector was 25.11 billion yuan, up 5.0% year on year; the urban rail sector was 13.18 billion yuan, up 3.9% year on year; the overseas sector was 3.74 billion yuan, up 45.2% year on year; general engineering contracting and other fields were 31.09 billion yuan, down 8.1% year on year, and the contract structure was optimized. By the end of 2023, the company had orders of 168.83 billion yuan, an increase of 14.5% over the previous year. On March 21, 2024, the company issued a bid announcement for important projects. Recently, it won bids for six important projects with a total bid amount of 2.32 billion yuan, accounting for 5.8% of the company's revenue in '22. With the further expansion of overseas markets and the increase in downstream demand brought about by the upgrading of rail transit equipment, the company's orders are expected to continue to grow in the future, which will have a positive impact on the company's 24-year performance.
Maintain a “buy” rating
The company's sales, management, and R&D expenses increased. Accordingly, we lowered the company's 24-25 net profit forecast of 11.2%/9.0% to 39.2/4.33 billion yuan, and introduced the 26-year net profit forecast of 4.77 billion yuan, corresponding to the 24-26 EPS of 0.37/0.41/0.45 yuan, respectively. The company is full of orders. In the future, it will continue to benefit from increased demand for rail transit equipment updates and maintenance, and maintain the company's A share and H share “buy” ratings.
Risk warning: industry competition increases risk, risk of declining urban rail sentiment, risk of poor progress in overseas projects