Revenue has achieved steady growth and is optimistic about the company's medium- to long-term development prospects
In '23, the company achieved revenue of 7.56 billion yuan, +21.24% year on year, with net profit attributable to mother and net profit of 340 million yuan, +19.2% and +3.1%; Q4 revenue in a single quarter was 1.6 billion yuan, -38.3% year on year; and non-net profit to mother and net profit of 0.83 million yuan, +20.2% and +19.7% year over year. The rapid increase in Q4 profit was mainly due to a sharp increase in gross margin and an increase of 87 million yuan in interest income. Non-recurring profit and loss for the full year of '23 was 50 million yuan, a year-on-year decrease of 46 million yuan. The company's cash dividend ratio in '23 was 22.6%, -1.9pct year-on-year, and the dividend rate corresponding to the closing price on March 29 was 1.4%. We expect the company's net profit to be 4.0, 4.7, and 540 million in 24-26 years (the value was 408/484 million yuan 24-25 years ago). We approve giving the company 18 times PE in 24 years, with a corresponding target price of 10.17 yuan, maintaining a “buy” rating.
The general contracting business is growing rapidly, and gross profit margins have been under pressure for a short time
By business, the company's general contracting business/design and technical business in '23 achieved revenue of 71.6 billion yuan and +21.5% and -9.6% year on year; gross margin was 9.8%, 28.7%, -1.6 pct, -2.2 pct, and overall gross margin was 10.4%, -1.8 pct year on year. The year-on-year decline in gross margin of each business led to a decline in overall gross margin. The gross margin for the Q4 quarter was 21.5% and +8.44% year over year. Looking at the regional distribution, the company achieved revenue of 7.53 billion yuan and 0.3 billion yuan respectively, +21.2% and +39.4% compared with the same period last year. Overseas business grew rapidly.
There are plenty of orders in hand, and I am optimistic about the company's overseas business layout
For the full year of '23, the company signed new orders of 17.96 billion yuan, of which orders in the chemical and non-chemical fields were 13,172 billion yuan, +174.20% compared to the same period, and 5.893 billion yuan of new materials and new energy sector orders in '23. It undertook general contracting, design and consulting projects in various fields related to new materials, as well as design and consulting projects related to off-grid hydrogen production by Dalian Clean Energy Group. Regionally, orders for domestic and foreign projects amounted to 12.67 billion yuan or 5.29 billion yuan, or -13.43% and +176.9% compared with the same period last year. The company focused on the “international” development strategy, vigorously promoted overseas operations, registered a branch in South Africa, increased business locations in Thailand, etc., and significantly increased the operating vitality of overseas marketing agencies in the host country and affected regions. By the end of '23, a total of 38.3 billion unfinished projects had been signed, which was 5.1 times the current revenue. Abundant orders are expected to guarantee subsequent performance growth.
Expense management capabilities have improved, and overall cash flow has remained excellent
The cost ratio for the period was 4.03%, -1.1 pct year on year. Among them, sales/management/R&D/finance expenses rates were -0.1 pct, -0.1 pct, -0.2 pct, and -0.7 pct, respectively. The cost control ability was good. Among them, financial expenses were -100.4% compared to the previous period, mainly due to an increase of 80 million in interest income over the same period last year. Asset and credit impairment was -100 million yuan, a year-on-year decrease of 0.1 billion yuan. The net interest rate under comprehensive influence was 4.8%, -0.04 pct year on year. In terms of cash flow, the company's net CFO in '23 was 512 million yuan, with a year-on-year increase of 74 million yuan. The payout ratios were 93.3% and 85.8%, respectively, +2.8 pct and +7.9 pct, respectively. Overall cash flow remained at a good level.
Risk warning: Contract performance progress falls short of expectations, project repayment falls short of expectations, overseas business risks.