Incident: The company released its 2023 annual report, and achieved revenue of 7.18 billion yuan in 2023, +38.8% year-on-year; net profit to mother of 55 million yuan, +4.2% year-on-year. 2023Q4 alone achieved revenue of 2.22 billion yuan, -1.7% year over year; net profit to mother - 160 million yuan, +40.3% year over year. The company's revenue is growing rapidly, and impairment of goodwill affects profits.
High-end equipment business such as material handling equipment grew rapidly, and the company's revenue increased dramatically; the environmental protection business's 23-year performance was under pressure, and the estimated impairment of goodwill of 215 million dollars dragged down net profit. In 2023, the company's material handling equipment business achieved revenue of 4.11 billion yuan, +70.2%, accounting for 57.2%. The high growth rate was mainly due to the fact that the company signed more than 10 billion material handling orders since 2021, with a centralized delivery period of 23-25 years; the marine engineering equipment and supporting equipment business achieved revenue of 1.44 billion yuan, +56.9% year-on-year, accounting for 20.0%; the ship and supporting equipment sector benefited from an increase in the ship cycle, achieving revenue of 7.2 billion yuan, +21.1% compared to the same period, accounting for 10.0%; high-end equipment business Motivating the company's revenue to grow. Furthermore, in 2023, the company's environmental protection sector achieved revenue of 720 million yuan, or -21.3% of the same period, and the company calculated a goodwill impairment of about 215 million dollars. Currently, the company's goodwill impairment has been sufficient, and the pressure on the environmental sector's performance has basically cleared up, and it is expected to achieve stable development in the future.
The business structure was optimized, and the gross margin of the core business increased; the scale effect was evident, and the cost ratio declined markedly during the period.
In 2023, the company's comprehensive gross margin was 20.4%, +0.57pp; the increase in gross margin was mainly due to a 1.14pp increase in gross margin of 1.14pp to 19.0%, an increase of 6.23pp to 19.22% in gross margin for marine engineering equipment and ancillary equipment, and a 10.58pp drop under pressure from environmental business demand; net margin was 2.8%, +0.9pp year on year. The company's management expense ratio for the 2023 period was 10.4%, -1.35pp; among them, sales, management, R&D and financial expenses rates were 1.6%, 4.9%, 2.9%, and -1.2%, respectively, -0.2pp, -0.2pp, and +0.6pp; the company's net interest rate was 17.4%, +0.2pp year-on-year, respectively.
Material handling orders are sufficient, ocean wind development is improving, and the ship cycle is improving, and the company's business has blossomed a lot. New orders for the company's material handling equipment have been launched one after another. More than 10 billion orders have been signed since 21, and the sector's performance is expected to grow steadily; the shipbuilding industry has entered a new upward cycle since 23, benefiting from the new shipbuilding market, the company's ship supporting equipment business is expected to remain stable; the annual production capacity of offshore wind power infrastructure such as single piles and conduit frames at the company's Nantong base has increased to 300,000 tons, which will fully benefit from the increase in demand for ocean wind; at the same time, the company's first batch of offshore wind power foundation piles and ancillary components passed the Japanese customer's high on-site inspection in February 2023, for the company Lay a solid foundation for further promoting overseas business.
Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be 4.4 billion yuan, 5.8 billion yuan, and 630 million yuan, respectively. The compound net profit growth rate for the next three years is 125%. The current stock price corresponds to 2024-2026 PE 9, 7, and 7 times, giving 2024 15 times PE, with a target price of 7.50 yuan, with a “buy” rating.
Risk warning: risk of macroeconomic deterioration; risk of contract performance; risk of impairment of goodwill; risk that litigation matters may affect performance fluctuations.