Performance is improving steadily, and diversified transformation and upgrading are being accelerated
The company achieved total revenue of 126.8 billion yuan, +9.5% year over year, and achieved net profit of 33.483 billion yuan, +7.07% year over year. Of these, Q4 achieved revenue of 377.924 billion yuan in a single quarter, +24.6% year over year, and achieved net profit to mother of 9.47 billion yuan, +14.7% year over year. Overall operation was steady, and revenue performance maintained good growth. In '23, the company signed a new contract amount of 310.6 billion yuan, +2.2% over the same period last year. By the end of '23, the amount of unfinished orders in the company reached 5876.41 billion yuan, which is about 4.7 times the revenue scale in '23. Abundant on-hand orders are expected to provide good support for subsequent revenue growth and performance release. We believe that the diversified transformation, upgrading or acceleration of the company's business and continued layout in the mineral resources sector is expected to create a second growth curve.
The infrastructure business grew steadily, and the development of mineral resources remained stable
By business, infrastructure construction/design consulting/equipment manufacturing/real estate development business achieved revenue of 10,876/183/274/50.9 billion yuan respectively, +10.6%/-1.9%/+6.0%/-4.8% year-on-year respectively. The railway business maintained rapid growth in the infrastructure business, achieving revenue of 296.8 billion yuan, +25% year-on-year, in addition to steady growth in highway and municipal sectors; other businesses achieved revenue of 79.3 billion yuan, +8.8% year over year, of which the resource utilization business achieved revenue of 8.367 billion yuan. Yuan, +11.5% year on year, the development and sales of major mineral resources remained stable. Among them, copper, cobalt, molybdenum, lead and zinc production was 28.38, 0.46, 1.52, 0.85, and 26,600 tons, respectively, -6.3%, -11.5%, and +11.3% year-on-year; silver metal production was 44 tons, the same as the previous year. The net profit of China Railway Resources Group's subsidiary in '23 was 4.69 billion yuan. Copper prices have risen rapidly since '24, which may have given some elasticity to the company's mineral resources sector performance. If calculated based on the unit price of copper at 72,000 yuan/ton, we expect the iron ore resources sector to contribute 5.8 billion yuan in net profit to mother in 24, accounting for 16.2% of our forecast net profit for 24 years.
Profitability improved slightly, and impairment losses eroded part of profits
The company's gross margin in '23 was 10.0%, +0.2pct year-on-year, with gross margins of infrastructure construction/design consulting/equipment manufacturing/real estate development/ other businesses respectively
8.9%/28.4%/21.3%/14.5%/17.0%, +0.4/+0.1/+0.7/-2.6/-1.0pct, year over year, respectively. The company's expense ratio for the 23-year period was 5.5%, +0.07pct. Among them, sales/management/R&D/finance expenses ratios were -0.01/flat/-0.03/+0.11pct, respectively. The total loss of the company's assets and credit impairment in '23 was 8.17 billion yuan, an increase of 2.04 billion yuan over the previous year. Under the combined influence, the net interest rate for 23 was 3.0%, -0.06pct year over year. In terms of cash flow, the net amount of the company's CFO in '23 was 38.4 billion yuan, compared to 5.188 billion yuan. There is still room for improvement in cash flow.
Optimistic about the difference in valuation expectations brought about by mineral resources. Maintaining the “buy” rating, we expect the company's net profit to be 354/374/39.4 billion yuan in 24-26 (346/365 billion yuan 24-25 years ago), +6%/+5% year-on-year, respectively. We are optimistic about poor valuation and performance expectations brought about by mineral resources, and maintain the “buy” rating.
Risk warning: Prices of mineral resources fluctuate greatly, order carry-over speed falls short of expectations, increased competition among central enterprises has led to declining profit margins, and infrastructure investment growth falls short of expectations.