Key points of investment
Net profit without return to mother was 9.106 billion yuan in 2023, up 14.24% year on year. The performance was in line with expectations. The company achieved revenue of 234.262 billion yuan in 2023, up 5.08% year on year; realized net profit of 11.712 billion yuan, up 0.50% year on year; net profit without return to mother was 9.106 billion yuan, up 14.24% year on year, and performance was in line with expectations. Q4 2023 achieved revenue of 91,226 billion yuan in a single quarter, up 4.41% year on year; net profit to mother was 5.56 billion yuan, down 1.18% year on year; net profit after deducting non-return to mother was 4.159 billion yuan, up 10.91% year on year.
Profitability is basically stable, and sales and R&D rates have increased slightly: in 2023, the company's overall gross profit margin was 22.27% (+1.05PCT), and the net profit margin was 6.22% (-0.22PCT). Among them, the gross profit margin of the railway equipment business was 25.27% (+0.77PCT), the gross profit margin of the urban rail and urban infrastructure business was 21.29% (+0.56PCT), the gross profit margin of the new industry business 19.14% (+1.51PCT), and the gross profit margin of the modern service business was 23.53% (-2.20PCT).
2023 company period rate 15.92% (+0.71PCT). Sales rate 3.92% (+0.46PCT), management rate 5.96% (-0.05PCT), finance rate -0.09% (+0.06PCT), R&D rate 6.13% (+0.24PCT). The increase in sales rates is mainly due to an increase in expected product quality assurance preparations.
Benefiting from the recovery of rail transit, the railway equipment business performed well. Railway equipment achieved a sharp increase in EMU and bus revenue: achieved revenue of 98.191 billion yuan (+18.05%) in 2023, including: EMU revenue of 41,829 billion yuan (YoY +43.39%), locomotive revenue of 27.985 billion yuan (YoY +1.59%), truck revenue of 18.678 billion yuan (YoY -7.67%), passenger car revenue of 9.699 billion yuan (+55.68% YoY), railway equipment repair and modification business revenue of 33.371 billion yuan (YoY) (YoY +7.62%). Urban rail and urban infrastructure: Achieved revenue of RMB 50.334 billion in 2023 (-9.68% YoY). The decline in revenue in this sector was mainly due to the decline in revenue from urban rail vehicles. Urban rail vehicle revenue in 2023 was RMB 40.237 billion (-15.84% year on year). New industry: 2023 revenue of RMB 80.624 billion (+4.56% YoY), mainly due to increased revenue from energy storage equipment and general components. Among them, the wind power business revenue was RMB 30.998 billion (+0.5% YoY). Modern service industry: Revenue of 5.112 billion yuan in 2023 (-26.12% year over year). The decline in revenue was mainly due to a decrease in logistics business.
New orders: The company signed new orders of 298.6 billion yuan in 2023, an increase of 7% over the previous year; orders in progress at the end of the period amounted to 270.3 billion yuan, an increase of 8% over the previous year.
Advanced EMU repair volume+demand for new construction continues, old locomotives are being updated, and the number of advanced EMU repairs is beginning to expand. According to several contracts signed from December 23 to March 24 announced by the company, the amount of advanced repair contracts was 14.78 billion yuan over the whole of 23 years. Railway passenger traffic reached a record high in 2023, and EMU demand is good. It is expected that the number of tenders in 24 will exceed 23 years, or close to 200 trains. The railway industry implemented large-scale equipment upgrades, and took the lead in replacing old locomotives, which is expected to contribute to increased performance.
Profit forecasting and valuation
The railway equipment boom is improving in 2023-2025. The company's net profit for 2024-2026 is expected to be 134.04 billion yuan, 149.50, and 16.795 billion yuan respectively, up 14.45%, 11.54%, and 12.34% year-on-year, with a compound growth rate of 12.77%, corresponding to PE of 15, 13, and 12 times, maintaining a “buy” rating.
Risk warning: 1) EMU tenders fell short of expectations; 2) new railway line production fell short of expectations; 3) replacement of old locomotives fell short of expectations; 4) New industry development fell short of expectations