Incident: The company announced that in 2023, it achieved revenue of 1137.993 billion yuan, an increase of 3.80%; realized net profit of 26.097 billion yuan, an increase of -2.19%; and realized net profit without deduction of 24.58 billion yuan and a 1.88% increase of 1.88%. The company's cash dividend ratio in 2023 reached 18.2%, and the dividend ratio of 0.35 yuan/share corresponding to the closing price on March 29 reached 4.12%.
The scale of revenue has increased steadily, and the gross margin of domestic business has increased. On a quarterly basis, the company's Q1-Q4 revenue was 2735.39/2675.21/2654.03/331.30 billion yuan, respectively, with year-on-year changes of 3.43%/-3.08%/2.9%/11.29%, respectively; Q1-Q4 net profit to mother was 59.08/77.41/57.71/6.677 billion yuan, respectively, 5.10%/-1.63%/9.34%/-15.61% year-on-year, respectively. By business, engineering contracting, planning and design consulting, industrial manufacturing, real estate development, material logistics and other businesses achieved revenue of 9873.25/187.54/239.99/832.72/958.66 billion yuan, respectively, with year-on-year changes of 2.34%/-7.60%/-2.96%/33.76%/0.38%, achieving gross profit margins of 8.87%/43.27%/22.10%/12.21%/7.94%, respectively, with year-on-year changes of 0.26pct/7.41pct/- 0.46pct/-1.79pct/0.51pct. By region, the company's domestic/overseas revenue in 2023 was 10776.84/60.310 billion yuan respectively, up 3.40%/11.52% respectively, achieving a year-on-year change of 0.38pct/-0.86pct in gross profit margin of 10.59%/6.87%, respectively.
Net interest rates and operating cash flow are under pressure in the short term. In 2023, the company's gross sales margin was 10.40%, up 0.31pct; the cost ratio for the period was 5.47% and 0.26pct, with the company's sales/management and R&D/finance expenses ratios of 0.65%/4.41%/0.41%, respectively, with a year-on-year change of 0.04pct/0.13pct/0.08pct; asset and credit impairment loss rate of 0.87% increased 0.15pct; net profit margin to mother 2.29% decreased 0.14pct. The company's net cash flow from operating activities was 20.412 billion yuan, a decrease of 35.723 billion yuan compared to the same period of the previous year; a decrease of 3.1 pct from revenue ratio of 101.48%; and an increase of 0.2 pct from current payment ratio of 101.16%. By the end of 2023, the size of the company's accounts receivable and notes, inventory+contract assets, accounts payable and notes, accounts receivable and contract liabilities were $1590/5994/5450/15.4 billion, respectively, a year-on-year change of 6.22%/8.14%/5.79%/-8.52% from the beginning of the year.
New orders have maintained positive growth, and water projects are expanding rapidly. The total number of new contracts signed by the company in 2023 was 3293.87 billion yuan, an increase of 1.51%. By business, the amount of new contracts signed for infrastructure construction projects of 28534.791 billion yuan increased by 1.74%, accounting for 86.63% of the total number of new contracts signed. Among them, the new contract amounts for the engineering contracting industry, investment and operation industry, and the green environmental protection industry were 20269.50/55.83/255.946 billion yuan respectively, with year-on-year changes of 8.82%/-24.05%/34.24%, respectively. The green environmental protection industry saw a large year-on-year increase, mainly because of the “double carbon” requirement, the market influence continued to expand; Looking at the new amounts for railway, highway, urban rail, housing construction, municipal administration, mining, water conservancy and water transportation, airport and power engineering were 3232.38/3277.12/1334.74/11640.39/3328.57/1305.79/1552.76/68.27/1314.59 billion yuan, with year-on-year changes of -34.06%/-21.53%/4.01%/23.61%/-19.92%/21.23%/87.32%/12.90%/9.00%, water conservancy The large year-on-year increase in projects is mainly due to closely following the national water network construction plan and continuing to strengthen the undertaking of projects such as flood prevention resources and soil and water conservation. By region, new domestic and overseas business signings accounted for 92.32%/7.68% of the total number of new signings, respectively, a year-on-year change of 3.47%/-17.38%. By the end of 2023, the total amount of the company's outstanding contracts was 6689.825 billion yuan, an increase of 5.14%, laying a solid foundation for future revenue recognition.
Investment proposal: We expect the company to achieve operating income of 11733.96/12131.48/1281,655 billion yuan and net profit to mother of 268.74/286.19/30.45 billion yuan in 2024-2026. The corresponding PE price on March 29 was 4.74/4.43/4.14 times, respectively, maintaining the “gain” rating.
Risk warning: Steady growth falls short of expectations; risk of large macroeconomic fluctuations; slow order execution.