Description of the event
The company released its 2023 annual report, achieving operating income of 91,244 billion yuan, an increase of 13.88%; net profit to mother was 1,553 billion yuan, an increase of 12.57%.
Incident comments
In 2023, the company's main economic indicators grew rapidly. Revenue of 91,244 billion yuan increased by 13.88%, and gross profit margin increased by 12.44%. By business: 1) The engineering construction business achieved operating income of 71,639 billion yuan, an increase of 15.92%, a gross profit margin of 9.74%, and an increase of 1.10pct. Of these, infrastructure engineering and investment of 39.620 billion yuan increased 8.14%, and gross profit margin of 9.79% increased by 0.15 pcts; housing construction projects increased 27.24% 9.68% increase of 2.49pct.
2) The real estate business achieved operating income of 7.152 billion yuan, a decrease of 5.79%, and a gross profit margin of 8.04%, a decrease of 5.48 pcts. 3) Other businesses (PC factory, hydropower plant operation, etc.) of 9.867 billion yuan increased by 12.88%, and gross profit margin of 14.82% decreased by 0.81 pct.
Profitability: The gross margin has increased, the expense ratio has remained flat, the asset+credit impairment loss ratio has increased, and the final net interest rate is relatively stable. The gross profit margin of 12.44% in 2023 increased by 0.77pct, and the cost ratio of 7.02% decreased by 0.01pct, of which the sales expense ratio increased 0.26% by 0.01pc (the main increase in real estate sales agency fees); the management expense ratio 2.45% decreased by 0.03pct; the R&D expense ratio 2.02% increased by 0.18pct; the financial expense ratio 2.29% decreased by 0.17pct, and the asset+credit impairment loss rate 2.4% increased by 1.01pct.
The net operating cash inflow was 3.671 billion yuan, which was a sharp shift from outflow to inflow over the previous year. The main reason was the company's debt collection. In 2023, the company's revenue decreased by 3.52 pcts compared to 93.12%; the net present ratio increased 293.02 pcts from 236.30% (mainly due to negative net operating cash flow last year); and the balance ratio of 85.95% increased by 1.37 pcts.
Orders: The volume of infrastructure orders in 2023 continued to grow steadily as a whole, and there were plenty of orders in hand at the end of the period. 2023.1) The construction business signed a new contract of 151.07 billion yuan, with infrastructure projects and investment of 98.175 billion yuan, an increase of 18.33% (including: road and bridge projects of 50,156 billion yuan, an increase of 20.93%; municipal engineering of 42,633 billion yuan, an increase of 22.16%; hydraulic engineering of 4.422 billion yuan, a decrease of 26.24%; port and shipping projects of 964 million yuan, an increase of 60.93%; and housing construction of 52.895 billion yuan, an increase of 6.28%). 2) The contracted sales area of the real estate business increased by 14.89% to 625,800 square meters, the contracted sales amount of 5.501 billion yuan increased 19.90%, and the 380 mu land reserve at the end of the period increased by 51.39%.
Intelligent construction is speeding up, and green development is accelerating. 1) Prefabricated buildings: The company built and put into operation 8 operating bases. The company's Construction Engineering Industrialization Group and the Construction Engineering Steel Group signed a total of 2,078 billion yuan in 2023 (including the company's internal orders), an increase of 23.47%. Construction engineering industrialization achieved revenue of 1,011 million yuan and total profit of 101 million yuan, and construction steel structures achieved revenue of 610 million yuan and total profit of 42 million yuan. 2) Inspection business: Construction Engineering Inspection signed a new contract amount of 830 million yuan in 2023 (including the company's internal orders), an increase of 33.8%, achieving revenue of 705 million yuan and total profit of 179 million yuan. 3) The holding operates 7 hydropower plants, with a total installed capacity of 246,1,000 KW, an annual design capacity of about 1 billion KWH. The operating conditions are good. In 2023, the company's hydropower business achieved revenue of 156 million yuan and total profit of 54 million yuan; the 496 MW roof distributed photovoltaic project of the Lu'an Intelligent Steel Base was officially connected to the grid in 2023, with an average annual power generation capacity of about 4.8 million kWh. The company is deeply involved in the infrastructure market and fully benefits from the steady growth of infrastructure. It is expected to have net profit of 17.47 billion yuan or 2,065 billion yuan in 2024 and 2025, corresponding to the current closing price of PE 4.66, 3.94 times the “buy” rating.
Risk warning
1. Policy progress fell short of expectations; 2. Raw material prices fluctuated greatly.