Net profit to mother was +39.8% year over year in '23, maintaining the “increase in holdings” rating. In the whole of 2023, the company achieved a total operating income of 32.933 billion yuan, +9.1% year over year; net profit to mother of 520 million yuan, +39.8% year over year; net profit without return to mother was 274 million yuan, or -33.9% year over year. Among them, the Q4 quarter achieved operating income of 10.422 billion yuan, -7.1% year on year; net profit to mother of 200 million yuan, or -34.2% year on year; net profit after deducting non-return to mother of 84 million yuan, or -54.0% year on year. We expect the company's net profit to be 8.3/13.0/1.53 billion yuan respectively in 2024-2026, with a year-on-year growth rate of 60.1%/56.1%/17.4%, corresponding to PE 21/14/12 times, respectively. Comparatively, the company's 2024 Wind unanimously expected an average PE value of 19 times. Considering the upward trend in the company's main business prosperity, we enjoyed a certain premium. We gave the company 26 times PE in 24 years, corresponding to a target price of 4.11 (previous value: 4.10) yuan, maintaining the “increase in holdings” rating.
Profitability increased steadily, and the overall cost rate for the period was well controlled
For the full year of 2023, the company's gross profit margin was 13.5%, +0.12pp. Among them, in the Q4 quarter, the company's gross profit margin was 15.7%, -0.93pp year on year. In terms of the period cost rate, the total cost rate for the whole year was 8.86%, -0.76pp compared to the previous year. Among them, the sales expense ratio was 0.6%, +0.06pp; the management expense ratio was 2.6%, -0.19pp; the financial expense ratio was 1.7%, -0.91 pp; and the R&D expense ratio was 4.0%, +0.28pp. The reduction in the financial expense ratio is mainly due to a reduction in the company's liabilities, a reduction in interest expenses, and an increase in exchange income due to fluctuations in the US dollar exchange rate. The overall cost ratio was well controlled during the period.
HAECO's business is developing rapidly, and the company has ushered in new opportunities for port upgrading and transformation. As a leader in the global port machinery industry, the product sales range exceeds 107 countries and regions around the world. In 2023, the port machinery business signed a new contract amount of 3.6 billion US dollars, +6.59% over the same period last year. The company's shore bridge products have a global market share of 70%, and have remained number one in the world for 26 consecutive years; it signed the Saudi NEOM Xincheng Port Engine project, which had the largest single contract for the whole year, and pure electric transporters and hybrid transporters have entered high-end markets such as Maersk, Dubai and Europe. With the advent of the global trend of intelligent upgrading of port automation, the port machinery market will usher in new opportunities, but at the same time, it will also place new requirements on the costs and innovation of HAECO enterprises. The company is expected to rely on its leading advantages in the heavy machinery industry to benefit deeply from the transformation of the manufacturing industry to high-end, intelligent and green.
The offshore engineering and steel structure business is progressing steadily. The company has benefited from the market sentiment and steady progress in the Shanghai engineering and steel structure business. The new contract amount for offshore engineering and steel structure-related business reached 2 billion US dollars, -8.19% over the same period last year (mainly due to last year's high base). In 2023, the first domestic rotary piling boat project and several high-specification crane vessels were successfully signed; the second domestic prefabricated, prefabricated cross-sea bridge was completed and opened to traffic, and the steel structure of the main bridge of the Ximen Tunnel in Australia was delivered. Looking ahead to 2024, the traditional oil and gas offshore industry market is gradually recovering. International oil prices will be high in the medium to long term, and the offshore equipment market will benefit from this; the country strengthens green transportation infrastructure construction, and the market prospects are good as demand for steel bridges increases.
Risk warning: Offshore business recovery is falling short of expectations, interest rate and exchange rate risks, raw material supply risks.