Description of the event

The company released its 2023 annual report, achieving full year revenue of 27.519 billion yuan, an increase of 3.93%; realized net profit of 868 million yuan, an increase of 44.80%; and realized net profit without deduction of 569 million yuan, an increase of 20.04%.

Incident reviews

All businesses have achieved steady growth. By product, earth-moving machinery, other construction machinery and accessories, and prestressed machinery achieved revenue of 15.9.06 billion yuan, 88.18 billion yuan, and 2,243 billion yuan respectively, with year-on-year growth rates of 2.24%, 4.39%, and 7.88% respectively. All businesses achieved steady growth.

Domestic and overseas companies all outperformed the industry in terms of revenue growth. The company's domestic market revenue was 16 billion yuan, a year-on-year decrease of 12.55%. The overall sales growth rate outperformed the industry, and the earthmoving machinery product sales growth rate outperformed the industry by 7 pct. Among them, the domestic market share of loaders increased for 4 consecutive years, ranking first in the industry, and the market share of excavators increased dramatically by 3 percentage points, ranking third in the industry. The international market revenue was 11.46 billion yuan, up 41.18% year on year, and the sales growth rate outperformed the industry by 20 pct.

The gross profit margin and expense ratio have both increased. The company achieved an overall gross profit margin of 20.82%, a sharp increase of 4.12 pct over the previous year. The main reasons include: an increase in the share of overseas revenue; an increase in the share of electrification and high value-added products; and continuous improvement in management efficiency. In terms of cost ratio, the company's cost ratio increased by 2.24 pct to 14.98% year on year. Among them, sales expense ratio, management expense ratio, financial expense ratio, and R&D expense ratio increased by 1.30, 0.19, 0.27, and 0.47 pct to 6.88%, 2.77%, 0.28%, and 2.82%, respectively.

The company vigorously develops strategic new and growing businesses such as mining machinery, aerial machinery, agricultural machinery, industrial vehicles, etc., and continuously optimizes the industrial layout. In the mining machinery business, we have accelerated product research and development, increased cooperation with customers to seize the mining market, and achieved mass sales in multiple regions. Sales increased significantly over the same period last year. In the aerial machinery business, we built the brand concept of optimal total cost of ownership and TCO and service urban applications. Annual sales revenue increased 112%, with overseas sales increasing by 123% year on year. In the agricultural machinery business, we have completed batch switching of four national tractor products, set up projects to develop high-end intelligent tractor products, and actively explore domestic and foreign agricultural machinery markets. In the industrial vehicle business, overseas revenue increased 57%, with overseas accounting for 60%.

The “three complete” strategy has been implemented accurately, and the mixed reform has achieved remarkable results. The company implements the entire business process with “profit growth, business growth, and capacity growth”, continuously improves the level of corporate governance, and deepens mixed ownership reform. The company's first stock option incentive plan was implemented, fully mobilizing the enthusiasm of management and core employees. The company promotes cost reduction and efficiency throughout the value chain, and important indicators such as net interest rate and ROE have all increased to varying degrees. By deepening lean production, optimizing processes, and optimizing product structure, we accelerate supplier integration and procurement quality improvement, and achieve cost reduction and efficiency in the value chain. Looking at the medium to long term, with the improvement of the corporate governance level and the optimization of the marketing system, we believe that the company's net interest rate level is expected to continue to recover to the industry average.

Profit forecasting and valuation

The company's 2024-2026 revenue is expected to be 312.77, 354.78, and 39.622 billion yuan, with year-on-year growth rates of 13.66%, 13.43%, and 11.68%; net profit to mother is 11.22, 14.24, and 1,744 billion yuan, with year-on-year growth rates of 29.26%, 26.97%, and 22.48%. The company's 2024-2026 performance corresponding PE was 15.24, 12.00, and 9.80 times, respectively. It was covered for the first time, and a “gain” rating was given.

Risk warning:

Overseas market development falls short of expectations; domestic market continues to decline; market competition increases risk; raw material prices fluctuate.