Net profit to the mother was +18.05% year-on-year, and profitability continued to increase, maintaining that “buying” Ancore achieved revenue of 1,122 million yuan (yoy +10.17%) in 2023, net profit of 210 million yuan (yoy +18.05%), deducting non-net profit of 184 million yuan (yoy +18.99%), and net operating cash flow of 315 million yuan (yoy +93.52%). The increase in profitability is mainly due to the company's continuous promotion of product platformization and software upgrades, driving gross margin optimization. The net profit growth rate of return to mother was higher than the revenue growth rate in '23. Considering the slowdown in the company's traditional business demand and lowering the profit forecast, EPS for 24-26 is expected to be 1.24, 1.59, and 2.11 yuan, respectively (the previous value was 1.45 and 2.09 yuan in 24-25). Referring to the comparable company 24E 19.3x PE (Wind agreed expectations), considering that the company's software business advantages and product competitiveness are becoming more prominent, the company was given 24E 26x PE, corresponding to a target price of 32.24 yuan (previous value 36.25 yuan) to maintain a “purchase”.
Revenue from the energy efficiency management business was +20% year-on-year. Looking at EMS 2.0's smooth progress by product, the company's core businesses such as integrated automation of power monitoring and substations, energy efficiency management, fire and electricity safety, and power sensors achieved revenue of 4.96, 3.57, 1.06, and 112 million yuan respectively, with year-on-year increases of 8.42%, 20.16%, 6.54%, and 5.75%, respectively. The growth rate of the energy efficiency management business is significantly higher than that of other products, and higher than the total revenue growth rate, mainly due to the smooth advancement of EMS 2.0 products.
We believe that in the context of electricity marketization, customer demand for energy consumption control is expected to be highlighted, and EMS 2.0 is expected to accelerate. The company's overall gross margin in '23 was 46.39%, up 0.24pct year on year. The gross margin level continued to be optimized. Among them, the gross margin of the energy efficiency management business was 46.77%, up 0.13pct year on year.
The overseas and new energy businesses contributed new momentum, and the cost ratio remained stable during the period. The company's sales/management/R&D expenses rate for 23 years was 14.55%/6.03%/11.40%, respectively, +1.05/-0.55pct compared to +1.05/-0.49pct, respectively. The increase in sales rates was mainly due to the company's accelerated sales layout for new businesses such as overseas and new energy. 1) Going overseas: The company attaches importance to overseas business opportunities and develops business layouts in Southeast Asia, Europe, the Middle East, Africa, North America, etc.; in '23, the company's sales and technical team went overseas several times to participate in industry exhibitions and establish multi-party cooperation; in '23, overseas revenue (excluding revenue sold overseas through domestic and foreign trade companies) accelerated significantly, up 128.10% year on year; 2) New energy: the company continued to promote product upgrades and EMS 3.0 products (EMS 2.0+optical storage and charging+AI smart strategies); in '23, the company completed a number of products The 3.0 project is being piloted, and new energy sources on the user side may contribute new growth momentum.
Microgrid management needs are becoming more and more prominent. Optimistic about the company's long-term growth potential. In March 2024, the National Energy Administration issued the “2024 Energy Work Guiding Opinions”, which further emphasizes the importance of distribution grid stability and power demand-side response. In December 2023, the National Development and Reform Commission reviewed and approved the “Electric Energy Quality Management Measures (Interim)” (hereinafter referred to as the “Management Measures”) to clarify power quality management standards. We believe that with the gradual improvement of top-level policies and the deepening of market-based electricity reforms, the demand for microgrid management will become more and more prominent. As a leading enterprise in the microgrid management system industry, the company is expected to give full play to its product advantages, continue to expand its market share, and have broad room for long-term growth.
Risk warning: New power system construction falls short of expectations; platform products fall short of expectations.