Incidents:
On March 29, 2024, the company released its 2023 annual report: in 2023, the company achieved operating income of 1.26 trillion yuan, an increase of 9.5% over the previous year; realized net profit to mother of 3.483 billion yuan, an increase of 7.07% over the previous year.
Opinions:
A leading integrated infrastructure company, with performance growth in line with expectations. During the reporting period, infrastructure construction remained the company's largest source of revenue. Among them, railways, highways, municipal and other businesses increased 25.25%, 3.3%, and 6.83% year-on-year respectively, while the overall infrastructure sector achieved revenue of 1.09 trillion yuan, an increase of 10.58% over the previous year. At the same time, the company launched actions to improve infrastructure project management efficiency. The gross margin of the infrastructure business also increased by 0.44pct to 8.86% during the reporting period, driving the company's revenue to increase 9.5% to 1.26 trillion yuan. Revenue from design consulting, equipment manufacturing, and real estate development was 182.56/273.77/50,914 billion yuan, respectively, -1.94%, 5.95%, and -4.76% compared with the previous year.
Prices of metals such as copper and molybdenum were relatively high during the reporting period. The resource utilization sector achieved revenue of 8.367 billion yuan, an increase of 11.49% over the same period, and a gross margin of 59.7%. Benefiting from improved project efficiency, net profit attributable to mother during the year was 3.483 billion yuan, an increase of 7.07% over the same period.
The market share of the main engineering industry continues to increase, and the financial, commodity, and mining sectors are providing additional volume. As the largest integrated engineering construction leader in China, the company signed a new contract amount of 3.1 trillion yuan in 2023, an increase of 2.2% over the previous year. The contract in progress at the end of the period was 5.88 trillion yuan, an increase of 19.2%, with sufficient orders. Among the new orders, the main engineering business grew by 11.4%, significantly faster than the growth rate of infrastructure investment in 2023. The company's leading advantage continues to be consolidated and enhanced, and profitability is expected to increase. The amount of new contracts signed in finance, commodity trade and resource utilization increased by 29.4% and 41.7%, respectively, over the same period last year. The gross margin of the resource sector is high, which will provide greater flexibility for the company's performance and help revalue the company's valuation.
Profit forecast and investment rating: Based on the growth rate of the company's new orders and active orders in 2023, we expect the company to achieve net profit of 35.862 billion yuan, 38.677 billion yuan, and 40.959 billion yuan respectively in 2024-2026, corresponding to PE 4.84, 4.49, and 4.24 times, respectively.
Covered for the first time, a “gain” rating was given.
Risk warning: Prices of upstream raw materials fluctuate greatly; there are delays in the execution of new orders; geopolitical risks; macroeconomics fall short of expectations; the cited data sources may be erroneous or biased.