The annual performance was outstanding, with a high percentage of cash dividends actively giving back investors revenue of 3.39 billion yuan for the full year of '23, +21.1% year-on-year, while net profit returned to mother and net income of $503 million and $503 million respectively, +10.3% and +22.0% year-on-year, respectively. Among them, Q4 achieved revenue of 1.35 billion yuan in a single quarter, +25% year-on-year, and non-net profit attributable to mother and net profit of 1.14 million and 150 million, +5.05% and +43.12% year-on-year. The rapid increase in net profit after deducting non-net profit was mainly due to an increase in Q4 gross margin. Non-recurring profit and loss in '23 was -37 million yuan, a year-on-year decrease of 50 million yuan. The company's cash dividend ratio for '23 was 40.21%, and the closing dividend rate as of March 28 was 3.53%. Considering the uncertainty of local infrastructure investment, we slightly lowered the company's profit forecast. We expect the company's net profit to be 5.6, 6.4, and 72 billion yuan (previous value: 5.9/660 million in 2.4 and 25), and approved 13 times PE over 24 years. The corresponding target price is 12.97 yuan, maintaining the “buy” rating.
The contracting business achieved relatively rapid growth. The collaborative business platform enabled quality improvement and efficiency. Looking at the sub-business segment, the survey and design, engineering management, and engineering contracting business achieved revenue of 20.8 billion, 1.5 billion, and +16.5%, +10.1%, and +31.3% year-on-year, with gross margins of 46.84%, 18.74%, and 12.04%, respectively, +4.89pct, +0.09pct, and -0.86pct. The overall gross margin increased 2.07 pct to 33.85% year-on-year, and Q4 gross profit margin increased 27.7% year-on-year 4.13 pct compared to the same period. The company focuses on building “one center, four major systems”, and the survey and design collaborative business platform empowers the overall quality and efficiency of the business. The annual revenue within and outside the province was 28.16 million and 561 million, +31.7% and -14.6%, respectively. Among them, 35.7 billion yuan and 1.01 billion new contracts were signed from within and outside the province, respectively, +13.5% and +14.8%, respectively; on-hand orders amounted to 8.58 billion yuan, or +12.75% over the same period, which is 2.5 times the current revenue.
New orders have grown rapidly. We are optimistic that the company's low-altitude economy business will expand to 4.582 billion yuan of new contracts in 23 years, or +13.80% compared to the same period. The survey and design, engineering management, and engineering contracting businesses signed new 22.7, 2.25, and 2,089 billion yuan respectively, respectively, +0.32%, +8.91%, and +34.2% over the same period last year.
In terms of new business development, urban construction business, digital intelligence business, engineering rehabilitation, and civil aviation business were newly signed at 2.04, 0.59, 1.55, and 0.34 billion yuan respectively, compared with -6%, +141%, +149%, and +47%, respectively. The company established the province's first civil aviation design institute, deepened the civil aviation consulting service and survey and design market, and obtained consulting projects for various general airports. As the first batch of low-altitude airspace management reform pilot provinces in the country, Anhui Province's low-altitude economy surpassed 40 billion yuan in 2023. By the end of 23, 69 projects were under construction in the low-altitude economy sector in the province, with a total planned investment of nearly 100 billion yuan. We are optimistic about the company's business growth prospects in the low-altitude economy.
Expense ratio increased slightly, and overall cash flow performance was good
The cost rate for the period increased by 1.09 pct to 13.56% year on year, and the sales, management, R&D, and finance cost ratios changed by +0.01pct, +0.31pct, +0.47pct, and +0.29pct, respectively. Asset and credit impairment was 87 million yuan, up 31 million from year on year. Impairment losses increased 0.58 pct to revenue, and fair value change losses increased by 75 million yuan, an increase of 64 million yuan over year. Under the combined impact, the net interest rate was 14.6%, a year-on-year decline of 1.3 pct. The net amount of CFO in '23 was 273 million, with a year-on-year decrease of inflows of 211 million yuan. The current balance of payments changed by -0.85 pct and +20.6 pct year on year, respectively. Payment items increased significantly compared to the same period in '22.
Risk warning: Order execution falls short of expectations; infrastructure investment falls short of expectations; digital intelligence business development falls short of expectations.