Event: The company publishes its 2023 annual report.
The performance was in line with expectations, and the risk of impairment was gradually released. In 2023, the company achieved operating income of 1.14 trillion yuan, a year-on-year increase of 3.80%, achieved net profit of 26.097 billion yuan, a year-on-year decrease of 2.19%, and realized net profit of 24.580 billion yuan after deduction, an increase of 1.88% over the previous year. In 2023, the company's real estate development business achieved revenue of 83.272 billion yuan, an increase of 33.76% over the previous year, mainly due to the increase in the number of projects delivered by the company during the reporting period. As of the end of the reporting period, the company's net operating cash flow inflow was 20.412 billion yuan, which was less than the inflow of 35.723 billion yuan compared to 2022. This was mainly due to an increase in cash from purchasing goods and receiving labor payments during the reporting period. The company's gross margin in 2023 was 10.40%, up 0.31pct from 2022; the company's net margin was 2.84%, down 0.06pct from 2022. In 2023, the company's asset impairment preparations led to credit impairment losses of 6.48 billion yuan, an increase of 1,592 billion yuan over 2022; asset impairment losses of 3.461 billion yuan, an increase of 410 million yuan over 2022. The 2023 impairment preparation calculation reduced the company's total profit by $9,941 billion.
Project contracts are growing steadily, and water conservancy and water transportation, housing construction, and mining projects are growing rapidly. The total number of new contracts signed by the company in 2023 was 3.29 trillion yuan, an increase of 1.51% over the previous year. By business type, the company signed a new project contract of 2.03 trillion yuan, an increase of 8.82%; signed a new green environmental contract of 255.946 billion yuan, an increase of 34.24% over the previous year, mainly because the company continued to implement green concepts and “double carbon” requirements, and the influence of the green environmental protection industry continued to expand; signed a new planning and consulting contract of 29.684 billion yuan, an increase of 0.78%; signed a new industrial manufacturing contract of 17.959 billion yuan, an increase of 196.98% year on year This is mainly due to normal fluctuations due to smaller scale; there has been a decline in new contracts signed in investment and operation, real estate development, material logistics, and industrial finance. In terms of segments, in 2023, the company signed a new housing construction contract of 1.16 trillion yuan, an increase of 23.61%; signed a new mining contract of 130,579 billion yuan, an increase of 21.23%; signed a new water conservancy and water transport project contract of 155.276 billion yuan, an increase of 87.32% year on year. The main reason was that the company insisted on keeping up with the national water network construction plan and continuously strengthening the contract for flood prevention, water resources, soil and water conservation and ecological construction; signed a new airport project contract of 6.827 billion yuan, an increase of 12.90% year on year; signed a new power engineering contract 131,459 billion yuan, up 9.00% year on year; new contracts signed by railways, highways, urban rail, and municipal governments declined year on year. Railways were mainly affected by the market, and the total number of project tenders during the reporting period decreased compared to 2022.
Market value management is to be included in the assessment of central enterprise heads to speed up the revaluation of the company's value. On January 24, 2024, the State Assets Administration Commission proposed further research to include market value management in the performance assessment of central enterprise heads, guide central enterprise leaders to pay more attention to the market performance of listed companies they control, promptly convey confidence and stabilize expectations through the application of market-based shareholding and repurchases, increase cash dividends, and better return to investors.
The implementation of this policy will help raise the level of market-based operation of central construction enterprises and promote their sustainable development. The company's valuation is currently at the lowest level of the eight major construction central enterprises. Under the catalyst of market value assessments, the company's value is expected to be revalued at an accelerated pace.
Investment advice: The company's 2024-2026 revenue is expected to be 1.17 trillion yuan, 1.25 trillion yuan, and 1.34 trillion yuan, respectively, up 2.59%, 6.77%, and 7.38% year on year, net profit to mother will be 27.487 billion yuan, 30.255 billion yuan and 33.657 billion yuan, respectively, up 5.33%, 10.07%, 11.24% year on year, EPS will be 2.02 yuan/share, 2.23 yuan/share, 2.48 yuan/share, respectively. The PE corresponding to the current stock price is 4.20 times , 3.82 times, and 3.43 times, maintaining the “recommended” rating.
Risk warning: Risk of order fulfillment falling short of expectations; risk of accounts receivable recovery falling short of expectations.