Introduction to this report:
As a leading construction machinery company, the company has formulated a “double improvement in quality and return” action plan to highlight the company's own strength, enhance investor confidence, and is optimistic about the company's overseas market expansion in 2024 to drive performance growth.
Key points of investment:
Investment advice: The company announced its 2023 annual report. The performance is in line with expectations. The traditional advantageous business is steadily improving in quality, and the emerging business is growing rapidly. We are optimistic about the company's performance growth. Maintain the 2024-25 EPS forecast of 0.59/0.72 yuan, add the 2026 EPS forecast of 0.87 yuan, maintain the target price of 9.26 yuan, and maintain the holdings increase rating.
The performance was in line with expectations, and high dividends gave back to shareholders. The company announced that it would achieve revenue of 47.08 billion yuan/ +13.1% in 2023, and net profit of 3.51 billion yuan/ +52.0% to mother. Achieved gross profit margin of 27.5% /+5.7pct and net profit margin of 8.0% /+2.3pct in 2023. In the fourth quarter, it achieved revenue of 11.56 billion yuan/year on year +5.3%, and net profit to mother of 650 million yuan/year on year +373.7%. The annual report revealed that it is proposed to distribute a cash dividend of 3.20 yuan (tax included) for 10 shares, with a total dividend of more than 2.7 billion yuan, a dividend rate of about 80%, and a dividend rate of 3.99%.
All major sectors of construction machinery have achieved positive growth, and overseas market expansion has achieved further good results. In 2023, the company's concrete machinery, lifting machinery, earthmoving machinery, and aerial machinery all achieved year-on-year increases in revenue and gross margin, with multiple products ranking first in the country. The results of the overseas layout and direct sales strategy have been demonstrated. The company has set up more than 350 second-level outlets worldwide, achieved product coverage in more than 140 countries/regions, rapidly increased its market share in Saudi Arabia, Malaysia, Vietnam, Kenya, etc., and construction cranes have achieved the highest market share in Turkey and Central Asia.
The policy has taken many measures, and I am optimistic that the domestic market will recover in 2024. An additional trillion treasury bonds were issued at the end of 2023, relieving local capital pressure; the real estate side accelerated the “Three Major Projects” layout; the 2024 “Equipment Renewal Plan” was actively promoted to expand market demand in the construction machinery industry and accelerate the arrival of the domestic construction machinery renewal and replacement cycle. We expect the domestic construction machinery industry to recover in 2024.
Risk warning: Demand for cranes and concrete machinery falls short of expectations, and overseas market expansion falls short of expectations.