Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 1,122 million yuan, a year-on-year increase of 10.17%, and achieved net profit of 210 million yuan, an increase of 18.05% over the previous year, net profit after deducting non-return to mother of 184 million yuan, an increase of 18.99% over the previous year; it plans to distribute a cash dividend of 3 yuan (tax included) for every 10 shares to all shareholders.
2023Q4 achieved operating income of 247 million yuan, a year-on-year increase of 0.44%, and realized net profit of 0.28 million yuan, a year-on-year decrease of 14.21% and a year-on-year decrease of 62.51%.
The scale of various businesses grew steadily in 23 years, and product transformation and upgrading helped increase gross margin. By business, in 2023, the company's power monitoring and substation comprehensive monitoring products and systems/energy efficiency management products and systems/fire and electrical safety products and systems/enterprise microgrids - others achieved revenue of 4.96/3.57/1.06 billion yuan, respectively, up 8.42%/20.16%/6.54%/1.53% year on year; power sensors achieved revenue of 112 million yuan, an increase of 5.75% year on year. In addition, the advantages of the company's product transformation and upgrading were further demonstrated. The share of software revenue continued to rise, and the comprehensive gross margin increased 0.24 pcts year-on-year to 46.39% in 2023.
Traditional business demand is slowing down, and overseas and new energy business layout is being accelerated. In 2023, the company already had many registered projects, such as lengthening the investment cycle and delays in starting construction, which affected the company's project implementation conversion rate to a certain extent. In this context, the company is making steady progress, focusing on booming industries, making good project reserves, and keeping up with existing registered projects to increase conversion rates; at the same time, it is also accelerating the expansion of overseas markets, mainly in Southeast Asia, Europe, the Middle East, Africa, North America, etc., and the company's overseas revenue increased 128.10% year-on-year to 0.3 million yuan in '23. In addition, the new energy business is booming in domestic and foreign markets. The company continues to expand new energy related products such as source network charging platforms and charging piles, which is expected to become the foundation for new business formats in the future.
Continuous R&D to maintain product competitiveness, linking R&D and sales to help promote products. In terms of R&D, the company continues to maintain its leadership in products and solutions. In 2023, R&D investment increased 5.65% year-on-year to 128 million yuan. On the basis of EMS 2.0, the company incorporated an optical storage and charging platform and EMS 3.0, an intelligent energy platform with artificial intelligence and AI, developed well. It has completed the product development structure and has test projects in operation. It is expected that the company's profitability level will be further improved in the future. Furthermore, the company formed a linkage between R&D and sales, and some R&D personnel sank into the market, provided technical guidance to the sales team, and helped promote the product.
Maintaining a “buy” rating: Affected by the lengthening investment cycle of existing registered projects and delays in construction, the company's order fulfillment was slightly delayed. Based on this, we lowered the 24-25 year profit forecast and introduced a 26-year profit forecast. The company's net profit for 24-26 is estimated to be 2.42/3.03 billion yuan (34% down/38% /increase), respectively. The corresponding EPS is 1.13/1.41/1.77 yuan, respectively. The current stock price is 19 times PE in 24 years.
The company's products are continuously upgraded, sales channels are continuously improved, and the overseas and new energy business is accelerated to help future growth and maintain a “buy” rating.
Risk warning: risk of electricity improvement falling short of expectations, risk of microgrid market release falling short of expected risk, risk of company channel expansion falling short of expectations, risk of increased market competition.