Incident: In 2023, the company achieved operating income of 1137.993 billion yuan, a year-on-year increase of 3.80%; net profit to mother was 26.097 billion yuan, a year-on-year decrease of 2.19%; net profit after deduction was 24.580 billion yuan, an increase of 1.88% year-on-year. The reviews are as follows:
Q4 Revenue improved dramatically, and new orders for green environmental protection, industrial manufacturing, and emerging industries grew rapidly. By industry, in 2023, the company's engineering contracting business, planning and design consulting business, industrial manufacturing business, real estate development business, material logistics and other businesses achieved revenue of 9873.25, 187.54, 239.99, 832.72, 95.866 billion yuan, respectively, up 2.34%, -7.60%, -2.96%, 33.76%, and 0.38% respectively.
By region, the country achieved revenue of 10776.84 billion yuan and 60.310 billion yuan, respectively, an increase of 3.40% and 11.52%, respectively. On a quarterly basis, the company's 2023Q1, Q2, Q3, and Q4 revenue increased 3.43%, -3.08%, 2.90%, and 11.29%, respectively. Net profit to mother increased 5.10%, -1.63%, 9.34%, and -15.61% year-on-year, respectively. Net profit after deducting net profit to mother increased 5.20%, -2.03%, 8.30%, and -1.01% year-on-year respectively; net interest rates for the single quarter were 2.52%, 3.59%, 2.60%, and 2.69%, respectively. The company's new orders also increased by 1.51% in '23. Among them, new orders for engineering contracting, investment and operation, green environmental protection, planning and design consulting, industrial manufacturing, real estate development, material logistics, industrial finance, and emerging industries also increased by 8.82%, -24.05%, 34.24%, 0.78%, 11.88%, -5.81%, -3.77%, -4.62%, and 196.98%, respectively.
Expense rates increased, depreciation increased, net interest rates declined, and net operating cash flow inflows decreased during the period. In terms of gross margin, gross margin increased 0.31 pcts to 10.40% in 2023. Among them, gross margins of engineering contracting, planning and design consulting, industrial manufacturing, real estate development, material logistics, and other businesses also increased by 0.26, 7.41, -0.46, -1.79, and 0.51 pcts, respectively. In terms of the period cost ratio, the cost rate for the 2023 period also increased by 0.26 pcts to 5.47%, of which the sales expense ratio increased by 0.04 pcts to 0.65%; the management cost ratio (including R&D expenses) increased by 0.13 pcts to 4.41%; and the financial cost ratio also increased by 0.08 pcts to 0.41%. The total impairment of asset+credit was $9.41 billion, an increase of $2,002 billion over the previous year. In terms of net interest rate, net interest rate decreased by 0.06 pct to 2.84% in 2023. The net operating cash flow in 2023 was 20.412 billion yuan, and the inflow decreased by 35.723 billion yuan; of these, revenue decreased 3.1 pcts to 101.48%, and cash payments increased 0.20 pcts to 101.16% compared to the same period.
The dividend ratio has been steadily increasing, and a continuous and stable dividend policy has been maintained. Based on the company's total share capital of 13579541,500 shares on December 31, 2023, the company paid a cash dividend of 3.50 yuan (tax included) for every 10 shares, with a total distributed profit of 4.753 billion yuan, accounting for 20.18% of the profits attributable to common shareholders of listed companies in the consolidated statements for the year, an increase of 4.27 pcts over the previous year. In recent years, the company's dividend payout ratio has remained above 15%, and the dividend ratio has steadily increased, maintaining a stable level of dividend payout.
Profit forecasting and ratings. We expect the company's EPS to be 2.14 yuan and 2.27 yuan in 2024-2025. Considering that the company has sufficient orders and fully benefits from stable infrastructure and the Belt and Road policy, we will give 2024 a price-earnings ratio of 5-6 times, a reasonable value range of 10.70-12.84 yuan, and maintain the “superior to the market” rating.
Risk warning. Refund risk, policy risk, overseas project risk.