The company's performance increased 29% in '23: According to Zheng Meiji's annual report, the company achieved revenue of 36.423 billion yuan in 2023, an increase of 13.67% over the previous year, and achieved net profit of 3.274 billion yuan to mother, an increase of 28.99% over the previous year. Among them, 23Q4 achieved revenue of 9.163 billion yuan, a year-on-year increase of 11.00%, and realized net profit of 807 million yuan to mother, an increase of 39.98% over the previous year;
Revenue from the coal machine sector increased steadily, and gross margin increased: in 2023, the company's total revenue from the coal machine sector was 18.854 billion yuan, up 12.51% year on year, achieving net profit of 3.193 billion yuan, up 25.25% year on year, and achieving net profit of 3,052 billion yuan, up 21.48% year on year. Among them, the gross profit margin of hydraulic supports and other coal machine equipment products and materials was 29.26%, an increase of 2 pcts over the previous year, contributing to performance;
Auto parts revenue improved, and SEG's performance improved dramatically: in 2023, the company's auto parts segment revenue was 17.569 billion yuan, up 14.94% year on year. Looking at subsidiaries, ASIMCO achieved revenue of 4.236 billion yuan, an increase of 22.93% year on year, and SEG achieved revenue of 13.355 billion yuan, up 12.55% year on year. Net profit of 276 million yuan was achieved, down 22.26% year on year, and net profit attributable to mother was 222 million yuan, down 26.64% year on year. Excluding the impact of ASIMCO Shanxi goodwill impairment preparation calculation in 2023 and the auto parts sector's net profit from asset disposal during the same period in '22, the net profit of the auto parts sector increased by 141 million yuan over '22. Among them, SEG achieved net profit of 185 million yuan in 2023, an increase of 131 million yuan over the previous year, an increase of 2.4 times over the previous year, mainly due to the results of SEG's business restructuring, cost reduction and efficiency measures;
Focusing on shareholder returns, the amount of dividends increased: in '22, the company's dividend ratio was 39.32%, totaling 998 million yuan in cash dividends. In '23, the company's dividend ratio was raised to 45.81%, and a total cash dividend of 1.50 billion yuan was distributed, and the dividend amount increased by 50% over the same period last year.
Considering the steady growth of investment in the coal industry, we slightly lowered the company's revenue growth rate; we revised the gross profit margin of the segmented business with reference to gross margin in 23 years. Also, considering the short-term increase in industry competition in coal machines and automobiles and the costs brought about by the cultivation of new products, we slightly lowered our 24-year gross margin forecast from the original forecast. As industry demand recovers and scale effects increase, we believe that the sector's gross margin will increase in 25 years. We forecast the company's 2024-2026 net profit of 37.0, 43.0, and 4.91 billion yuan, respectively, and earnings per share of 2.07, 2.41, and 2.75 yuan respectively (the original forecast earnings per share for 2024-2025 were 2.25 and 2.69 yuan, respectively). Referring to comparable company valuations, the company was given 11.5 times PE in 24 years, and the corresponding target price was about 23.80 yuan, maintaining the purchase rating.
Risk warning
Industry policy changes, commodity price fluctuations, slow investment in coal production capacity, falling short of expectations in automobile consumption, falling short of expectations, development of new energy businesses falling short of expectations, increased competition, risk of exchange rate fluctuations, risk of impairment of goodwill