Event: On the evening of March 28, the company released its 2023 annual report
Key points of investment
The 2023 performance increased by nearly 52% year on year. Under the overall pressure of the industry, the company's growth highlights that the company achieved revenue of 47.075 billion yuan in 2023, up 13.08% year on year; net profit to mother was 3,506 billion yuan, up 52.04% year on year; net profit without return to mother was 2,708 billion yuan, up 109.51% year on year, mainly benefiting from product structure advantages, remarkable results in cultivating emerging businesses, and rapid expansion in overseas markets. Looking at the fourth quarter alone, the company achieved revenue of 11.561 billion yuan, up 5.26% year on year, and net profit of 651 million yuan, up 373.72% year on year. Against the backdrop of overall pressure on the industry, the company performed well.
The increase in profitability was mainly due to an increase in export share, product structure optimization, and a drop in raw material prices. The company's gross profit margin in 2023 was 27.54%, up 5.71 pct year on year, and the net profit margin increased 2.28 pct year on year. The sales expenses ratio, management expense ratio, R&D cost rate, and financial expense ratio were 7.56%, 4.04%, 7.31%, and -0.55%, respectively, +1.23pct, +0.26pct, +1.29pct, +0.09pct. The increase in gross margin is clearly mainly due to factors such as rapid export growth, continuous optimization of the product structure, a decline in raw material prices, and a decline in shipping costs. Looking at the fourth quarter of a single quarter, the gross profit margin was 26.89%, up 2.66 pcts year on year, down -0.57 pct from month to month, net profit margin 6.13%, up 4.59 pcts year on year, and down 1.24 pct from month to month.
The main dominant business has been rising steadily, and emerging businesses have continued to break through. The spin-off and listing of high-altitude machinery accelerates the company's dominant business growth. The revenue of concrete machinery and lifting machinery both increased 1.6% year on year, accounting for 59.3% of revenue, down 6.7 pct year on year. Big Tower products have been delivered in batches, and construction of a truck crane plant in Chongqing has begun. Emerging businesses continued to break through. Earthmoving machinery revenue increased 89.3% year on year, CUHK's domestic share doubled year on year, and overseas revenue increased by more than 100% year on year. Mining machinery revenue was nearly 800 million yuan, an increase of 140% over the previous year. The first self-developed 100-ton nationally produced chemical electric drive mining truck has been discontinued. Aerial machinery revenue increased 24.2% year-on-year, ranking first in the domestic market share for small and medium-sized customers. The product spectrum achieved full coverage of 4-72 meters, and the penetration rate of electrified products reached more than 90%. The company is promoting the injection of the high-tech business into the subsidiary Lu Chang Technology to achieve a spin-off and listing. After the transaction is completed, Zhonglian Hi-Tech's financial strength will be further enhanced, and it is expected to seize the opportunity to accelerate development.
Strong overseas growth, high market share growth in key markets, capacity expansion and network deepening supported future development companies' overseas revenue growth of 79% in 2023, accounting for 38% of total revenue, an increase of 14 pct over the previous year, and strong overseas business growth. Localization strategies in key countries have achieved remarkable results. Gongqi products have become the brand with the highest market share in Turkey and Central Asia, and built products to maintain the number one position in the Turkish market. Markets such as Saudi Arabia, Malaysia, Vietnam, and Kenya have rapidly increased their market share through localization efforts. Oil-producing countries such as Turkey, Saudi Arabia, and the United Arab Emirates are promoting infrastructure, and demand is growing rapidly and is expected to continue. The overseas subsidiary CIFA in Italy expanded its business into various fields such as construction and construction. The company has built more than 30 first-level business airports, more than 350 second-level outlets, and its products cover more than 140 countries and regions. Overseas business is expected to maintain its boom as network construction declines and production capacity expands.
Profit forecast: Net profit from 2024 to 2026 is expected to be 4.5 billion, 6 billion yuan, and 7.7 billion yuan, up 29%, 33%, and 28% year-on-year. PE is 15, 12, and 9 times, maintaining the purchase rating.
Risk warning: 1) Infrastructure investment and housing commencement fell short of expectations; 2) Exports fell short of expectations