Core views
The company achieved annual operating income of 20.954 billion yuan, a year-on-year increase of 16.05%, net profit of 672 million yuan, a year-on-year increase of 36.89%, after deducting non-net profit of 694 million yuan, an increase of 142.13% over the previous year. Mainly due to the expansion of the company's business scale and remarkable results in cost reduction and efficiency, the gross margin increased while the cost ratio decreased. The company's building decoration orders, especially orders for the main curtain wall business, bucked the trend. New orders for the whole year increased 9.7% year-on-year, consolidating its leading position in the industry. In addition, the company's BIPV project orders and revenue both achieved a high increase in 2023. As favorable policies continue to be introduced and the company's special-shaped photovoltaic module base is put into operation, the company's BIPV business is expected to further increase profits in the future.
occurrences
The company released its 2023 annual report. It achieved annual revenue of 20.954 billion yuan, a year-on-year increase of 16.05%, and net profit to mother of 672 million yuan, an increase of 36.89% year-on-year, after deducting non-net profit of 694 million yuan, an increase of 142.13% over the previous year.
Brief review
Revenue and net profit after deducting non-net profit reached record highs. In 2023, the company achieved operating income of 20.954 billion yuan, a year-on-year increase of 16.05%, net profit of 672 million yuan, a year-on-year increase of 36.89%, after deducting non-net profit of 694 million yuan, a year-on-year increase of 142.13%. Among them, operating income and non-net profit were all new highs since the company went public. The main reasons include: 1) The company achieved remarkable results in cost reduction and efficiency. The gross margin of the company's building decoration/healthcare business increased 0.47/2.11 percentage points year on year, respectively, in 2023, while the cost ratio decreased by 1.29 percentage points year on year. Among them, the management expense ratio was reduced by 1.06 percentage points; 2) The subsidiary Gangyuan Decoration turned a loss into a profit in 2023, achieving net profit of 25.44 million yuan (loss of 129 million yuan in the previous year).
The leading edge in the curtain wall industry is stable. The company signed new orders of 25.8 billion yuan in 2023, up 9.7% year on year, of which new curtain wall orders were signed at 17.2 billion yuan, up 21.0% year on year, of which 6.6 billion yuan was new orders in the fourth quarter, up 68.8% year on year. Against the backdrop of a slight decline in the overall order size of the construction industry, the company bucked the trend and remained at the top of the curtain wall industry list throughout the year, and curtain wall system orders reached a record high in the company's history.
The company experienced high growth in BIPV orders and revenue. In 2023, the company received BIPV orders of 1.37 billion yuan, an increase of 60% over the previous year, and achieved BIPV project revenue of 704 million yuan, an increase of 309% over the previous year. At the same time, favorable policies for BIPV continued to be introduced. On March 15 this year, the State Administration relayed the “Work Plan to Accelerate Energy Conservation and Carbon Reduction in the Construction Sector”, proposing that all regions should promote integrated photovoltaic construction of new buildings such as factories, public buildings, and residential buildings on a pilot basis, and strengthen the installation of photovoltaic systems in existing buildings. With the company's Xishui special-shaped photovoltaic module base put into operation, the company's BIPV business is expected to gain momentum in the future with favorable policies.
Keep the purchase rating and target price of $9.15 unchanged. The company achieved rapid growth in 2023, giving full play to scale effects and brand advantages, improving operating efficiency, and growing the BIPV business as scheduled. We forecast that the company will achieve a net profit distribution of 80/9.3/1.05 billion yuan in 2024-2026, corresponding EPS of 0.70/0.82/0.92 yuan, respectively, and keep the purchase rating and target price unchanged at 9.15 yuan.