The company released its 2023 annual report, and the results were in line with expectations. During the reporting period, the company's technical services and smart equipment business maintained a growing trend. At the same time, the company strengthened its management of operating efficiency, and its net operating cash improved significantly. In 2023, the company established a national energy storage innovation center, which is expected to bring a new round of business opportunities to the company's energy storage business and maintain a “highly recommended” investment rating.
The 2023 results were in line with expectations, and net profit increased significantly in the fourth quarter. In 2023, the company's revenue was 2,537 million yuan, +41.77%; net profit to mother was 281 million yuan, +36.71% year over year; net profit after deduction was 265 million yuan, +36.53% year over year; net operating cash of 521 million yuan, +71.12% year over year; and comprehensive gross profit margin in 2023 was 28.98%, down 0.68 percentage points year on year. The 23Q4 company's revenue was 903 million yuan, +32.04% year over year; net profit to mother was 121 million yuan, +73.98% year over year; net profit after deduction was 117 million yuan, +96.01% year over year. The company plans to distribute a cash dividend of 1.75 yuan for every 10 shares to all shareholders.
The technical services business continued to grow at a high rate. During the reporting period, the company's technical service business revenue was 1,402 billion yuan, +78.97% year-on-year. Among them, the company's energy storage system technical service revenue was 726 million yuan, accounting for an increase of 28.62% of the company's revenue, mainly due to the completion and acceptance of some large-scale energy storage EPC projects; the gross margin of energy storage increased by 3.08 percentage points, mainly due to the higher gross margin of individual large-scale projects and the increase in overall gross margin. The revenue from test inspection and commissioning services was 582 million yuan, +64.73% over the same period. The main reason was that the company's grid-side test and inspection business continued to expand. The acquisition of two new subsidiaries, Guizhou Chuangxing and Guangxi Guineng, brought business growth; the gross margin of test inspection and commissioning decreased 4.59 percentage points year-on-year, mainly due to the high material costs of some wastewater zero-emission transformation and automated transformation projects, which lowered the gross margin of the test and inspection business.
The business of intelligent power distribution equipment and intelligent monitoring equipment continues to grow. During the reporting period, the company's smart device revenue was 1,127 billion yuan, +13.78% year-on-year. Among them, revenue from intelligent power distribution equipment was 442 million yuan, +31.85% year over year, and gross margin increased by 827 percentage points year on year. It was mainly due to a sharp increase in revenue from iNOS systems and core modules developed independently by the company, and gross margin increased dramatically. Revenue from intelligent monitoring equipment was 258 million yuan, +5.04% year-on-year, and gross margin increased 1.47 percentage points year-on-year, mainly due to increased revenue from video surveillance devices and fault location devices. Revenue from robots and drones was 275 million yuan, -7.36% year over year, mainly due to changes in the annual procurement cycle of core customers, and the overall procurement scale declined slightly; gross margin of robots and drones fell 2.85 percentage points year on year, mainly due to a decline in gross margin of autonomous drone airports and ancillary facilities such as charging cabinets.
Continue to strengthen R&D and innovation, and establish a national energy storage innovation center. During the reporting period, the company's sales, management and R&D rates were 3.65%, 7.37%, and 6.41%, respectively, with changes of -0.88, +0.36, and -0.37 percentage points over the same period last year. In 2023, the company continued to increase its R&D efforts, and the number of R&D personnel increased. By the end of '23, the number of R&D personnel in the company was 298, an increase of 117.52% over the same period last year. The company has always been committed to key core technology research in the field of electricity and energy, laying out research directions such as new energy storage, artificial intelligence, and intelligent electricity distribution in advance. During the reporting period, the company closely focused on new energy storage tracks, flexibly applied platform-based industrial innovation ecosystem construction concepts, and formed a new energy storage innovation center integrating R&D, testing, pilot testing, and empirical evidence, with global influence. We believe that the innovation center is expected to bring a new round of business opportunities to the company's energy storage business in 2024.
Net cash from operations improved. During the reporting period, the company strengthened the overall management of funds, increased the control of repayments such as project execution progress payments, inspection and settlement, etc., and increased cash inflows from operating activities. At the same time, the company strengthened capital expenditure budget management, arranged payments in a reasonable and orderly manner in accordance with contract payment terms, and balanced cash income and expenditure, leading to an increase in cash flow. At the end of the reporting period, the book value of the company's accounts receivable was 418 million yuan, accounting for 9.05% of total assets, and accounts receivable increased 8.63% over the same period of the previous year. As the company's business scale expanded and accounts receivable balance increased, the company's customers were mainly power grid customers and large power generation companies. Customers had high credit and repayment ability, and the risk of bad accounts receivable was small.
Maintain a “Highly Recommended” investment rating. The company's revenue for 2024 to 2026 is estimated to be 46.94, 64.78, and 8.745 billion yuan, respectively, and net profit to mother of 463, 6.35, and 872 million yuan, corresponding PE is 34.4, 25.1, and 18.3 times, respectively, maintaining a “highly recommended” investment rating.
Risk warning: There is a risk of heavy dependence on China Southern Power Grid, the risk of energy storage business expansion falling short of expectations, and the risk of falling inventory prices.