Incident: The company released its 2023 annual report. For the full year of 2023, it achieved revenue of 7.183 billion yuan, net profit to mother of 55 million, +4.1% year-on-year, gross profit margin of 20.4%, year-on-year -1.6 pct: 23Q4 achieved revenue of 2,217 million, year-on-year, +14.8% month-on-month, net profit of -162 million, year-on-year -40.3%, month-on-month -374.2%, gross profit margin of 26.5%, year-on-year +4.5 pcts, and +10.3 pcts month-on-month.
Net profit performance attributable to mother in 2023 was under relative pressure: mainly due to asset impairment losses of 330 million yuan, including impairment of goodwill of 220 million and impairment of long-term equity investment of 100 million due to poor operating performance of CNPC's environmental hazardous waste business; and 80 million yuan in credit impairment losses. The overall performance of the operating side, particularly the performance of the equipment sector, was in line with expectations.
2023 revenue split: In 2023, the company's material handling equipment business achieved revenue of 4.11 billion yuan, +70.1%, gross profit margin 19.0%, year-on-year +1.1 pct: marine engineering equipment business revenue of 1.44 billion yuan, +21.1% year-on-year, gross profit margin 19.2%, year-on-year +6.2pct; ship and supporting revenue of 720 million yuan, year-on-year +56.9%: general equipment manufacturing industry other revenue of 70 million yuan, +27.7% year on year; revenue from hazardous medical waste disposal of 410 million yuan, +1.9% year on year; revenue from sludge treatment 1.0%; Renewable thermoelectric revenue of 210 million, -1.34% YoY
The global layout of the material handling sector is expected to increase the global market share and drive continued growth in revenue scale. In 2023, the German holding subsidiary Koch acquired the global bulk handling business of former ThyssenKrupp and Sandvik under FLSmidth, including all ongoing global after-sales service orders for this business, which is expected to further enhance the company's market competitiveness and global after-sales service capabilities in the field of global bulk handling and handling system equipment, promote the company's internationalization process, and expand the scale of the company's high-end equipment business.
Continuous breakthroughs in marine engineering assembly and supporting businesses. In 2023, the company delivered 130,000 tons of offshore wind power foundation piles and conduit frames, and completed the delivery of single pile products to the Japanese market, successfully entering the Japanese offshore wind power market. Furthermore, in the offshore shipping sector, Shanghai Tiantao's “3,000-ton self-propelled full-rotation crane” was successfully completed and delivered, enriching the marine sector's business products, and is expected to continue contributing to growth in the future.
Looking forward to follow-up: For the equipment sector, there are plenty of orders in hand, which continues to empower the company's performance development; for the environmental protection sector, the company currently has a reputation of 220 million, including 120 million in Greenway's environmental sludge treatment business and 97 million. The CPC environmental hazardous waste business has been fully calculated. The sludge and medical waste business is relatively stable, and the risk of impairment is small, which is expected to reflect the company's depreciation expectations.
Profit forecast and investment rating: Considering factors such as industry progress and risk of impairment, we have revised the company's performance. We expect the company to achieve net profit of 3.5/4.3/540 million yuan in 24-26 years (previous forecast value of 405/55 million in 24-25 years), +534%/+23%/+24% year-on-year. The PE corresponding to the current stock price is 12.0/9.7/7.8 times, respectively, maintaining the “buy” rating.
Risk warning: Demand falls short of expectations: competition increases risk; orders cannot absorb expectations; risk of impairment of goodwill, etc.