Incident: Zoomlion Heavy Industries released its 2023 report. The company achieved operating income of 47.075 billion yuan in 2023, up 13.08% year on year; net profit to mother was 3,506 billion yuan, up 52.04% year on year; net profit after deduction was 2,708 billion yuan, up 109.51% year on year.
Comment:
2023Q4's net profit to mother increased year-on-year. In 2023, the company achieved revenue of 47.075 billion yuan, up 13.08% year on year; net profit to mother was 3,506 billion yuan, up 52.04% year on year. The gross margin was 27.54%, up 5.71 pcts year on year. The increase in gross margin benefited from factors such as falling raw material prices and an increase in the share of overseas business; the net margin was 8.01%, up 2.28 pcts year on year. The cost rate for the period was 18.36%, and the sales, management, R&D, and finance cost ratios increased by 1.23 pct, 0.26 pct, 1.29 pct, and 0.09 pct, respectively. With 2023Q4, the company achieved revenue of 11.561 billion yuan, a year-on-year increase of 5.26% and a month-on-month increase of 1.06%. Net profit attributable to mother was 651 million yuan, up 373.72% year on year and down 20.12% month on month. Gross margin was 26.89%, up 2.66 pct year on year, down 0.57 pct; net margin was 6.13%, up 4.59 pct year on year, down 1.24 pct month on month.
The cost rate for the period was 20.59%, up 0.42pct year on year and 1.24pct month-on-month.
The leading product business advantages are stable, and emerging businesses are growing rapidly. In 2023, the company achieved revenue of 19.291 billion yuan, 8.598 billion yuan, 6.648 billion yuan, 5.707 billion yuan, 2,092 billion yuan, and 4.242 billion yuan respectively. The year-on-year changes were +1.64%, +1.63%, +89.32%, +24.16%, -2.17%, and +23.16%, respectively. The company's dominant business The market share of engineering hoisting machinery remains leading in the industry. The market share of concrete machinery long boom pumps and mixing plants still ranks first in the industry, and the market share of mixers remains second in the industry. Earthmoving machinery and aerial machinery revenue from emerging businesses continued to grow rapidly. Excavators accelerated the improvement of the electric product range, and the domestic market share of medium and large excavators doubled year-on-year; the domestic market share of medium and large excavators ranked first. The product spectrum achieved full coverage of 4-72 meters, and the penetration rate of electrified products reached more than 90%, making it the most comprehensive model aerial equipment manufacturer in China.
The company's overseas revenue rose to a record high. The company's overseas revenue in 2023 was 17.905 billion yuan, up 79.20% year on year, accounting for 38.04% of revenue. The gross margin of overseas business was 32.23%, 7.57pct higher than domestic business. The company attaches importance to overseas market expansion, resolves its international development strategy, and is deeply involved in the “Belt and Road” construction. Effective breakthroughs have been achieved in key markets. Localized development strategies in key countries have achieved remarkable results, and its product market share has increased rapidly. Construction machinery has become the brand with the highest market share in Turkey and Central Asia, and markets such as Saudi Arabia, Malaysia, Vietnam, and Kenya have rapidly increased their market share through localization.
Investment advice: In 2023, the company's leading products will maintain a good competitive advantage, emerging businesses will develop rapidly, and profitability will improve. The company adheres to the internationalization strategy and is deeply involved in the “Belt and Road” construction. Overseas business revenue has increased, and there is huge room for growth. The company's 2024-2025 EPS is expected to be 0.52 yuan, 0.64 yuan, and 0.79 yuan respectively. The corresponding PE is 16 times, 13 times, and 10 times, respectively, maintaining a “buy” rating.
Risk warning: (1) If infrastructure/real estate investment falls short of expectations, demand for the company's products weakens; (2) if the issuance of special bonds slows down or the issuance amount falls short of expectations, the number of downstream projects started will decrease, which will affect the company's product sales; (3) if overseas market demand for domestic companies' products decreases, it will put pressure on the company's performance; (4) if raw material prices rise sharply, the company's performance will face greater pressure.