Net profit due to mother in 2023 was +2.07% YoY, in line with expectations, after deducting non-net profit +25.2% YoY. According to the company's announcement, the company's total revenue in 2023 was 406 billion yuan, +10.8% year on year; net profit to mother was 7.99 billion yuan, +2.07% year over year, in line with expectations; after deducting non-net profit of 7.16 billion yuan, +25.2% year on year, it is mainly due to government subsidies and illiquid asset disposal revenue higher in '22 compared to 23 billion yuan and 1.48 billion yuan respectively. In 2023, the company's gross profit margin and net profit margin were 12.64% and 2.77%, respectively, +0.22pct and -0.07pct year over year; the total cost ratio for the period was 8.45%, +0.14pct year on year, with sales, management, R&D and financial expenses ratios of +0.01pct, -0.11pct, +0.11pct, and -0.11pct, respectively. Asset and credit impairment losses amounted to $3.23 billion in 2023, accounting for 0.80% of revenue, +0.11pct year-on-year. On a quarterly basis, 23Q1/Q2/Q3/Q4 achieved revenue of 88.5 billion/ 103.6 billion/ 93.2 billion/ 12.7 billion, +24.2%/+19.1%/+11.6%/-3.1% year-on-year, and realized net profit to mother of 1.13 billion/ 1.53 billion/ 420 million/4.91 billion, +17.8%/-16.8%/-68.0%/+35.3% year-on-year. The company paid a cash dividend of RMB 0.0260 (tax included) per share in '23, with a dividend ratio of 14.24%, +0.22pct compared to '22, with a dividend rate of 1.2% (calculated at the closing price on April 3, 2024).
The energy engineering boom continues to rise, and the transformation of new energy investment and operation is progressing in an orderly manner. According to the company announcement, by sector, 1) The engineering construction business achieved operating income of 343.5 billion yuan in 2023, +13.7% year-on-year, and gross margin increased 0.20 pct to 7.85% year over year. Among them, revenue from new energy and comprehensive smart energy projects was 115.7 billion yuan, +39.4% year-on-year, and gross margin increased 0.22 pct to 5.54%. 2) The industrial manufacturing business achieved operating income of 33.7 billion yuan, +22.6% year over year, and gross margin decreased 0.77pct to 16.9% year on year. Revenue growth was mainly due to a 51.1% year-on-year increase in revenue from the explosion business. 3) The investment and operation business achieved revenue of 294.3 billion yuan, of which new energy and integrated smart energy operating revenue was 3.72 billion yuan, +58.8% year over year. By the end of 2023, the company had accumulated 9.511 million kilowatts of new energy connected to the grid, including 2.72 million kilowatts of wind power, 6.67 million kilowatts of solar energy, and 100,000 kilowatts of new energy storage. 3) Real estate (new urbanization) business revenue was 13.4 billion yuan, -33.3% year-on-year, and gross margin increased 7.65 pcts to 26.9%. 4) The survey design and consulting business achieved revenue of 19.2 billion yuan, +9.86% year-on-year, and gross margin decreased by 2.11 pct to 39.4%. Among them, new energy and comprehensive smart energy survey and design revenue was 3.26 billion yuan, -0.40% year-on-year, and gross margin decreased 2.03 pct to 26.6%.
Cash flow from operating activities increased year-on-year by 1.55 billion dollars. According to the company's announcement, the company's net cash flow from operating activities in 2023 was 9.49 billion yuan, an increase of 1.55 billion dollars over the previous year, mainly due to good repayment conditions. Revenue in 2023 was 88.3%, down 3.57 pct from the same period last year, notes receivable and accounts receivable increased by 3.26 billion yuan, inventory increased by 6.58 billion yuan, contract assets increased by 23.8 billion, and contract liabilities increased by 9.65 billion yuan; payable ratio was 84.8%, down 4.31 pct year on year, advance payments increased by 4.48 billion yuan year on year, and notes payable and accounts payable increased by 36.7 billion yuan year on year. At the end of 2023, the company's balance ratio was 76.0%, up 1.16pct from the end of '22.
New orders have increased dramatically, and energy projects continue to advance. According to the company announcement, in 2023, the company signed a total of 1,283.7 billion yuan of new contracts, up 22.4% year on year. By sector, 1) Construction orders were 1,1982 billion yuan, up 20.9% year on year, including 198.6 billion new contracts, +7.53% year on year, new energy and comprehensive smart energy signed 529.2 billion yuan, +26.1% year on year, 278.2 billion new contracts for urban construction, +31.1% year on year; 2) 46.9 billion new contracts were signed for the integrated transportation category, +16.8% year on year; 2) New signings for survey, design and consulting , a year-on-year increase of 50.0%.
We believe that as steady growth continues to ferment and the “double carbon” target continues to advance, the company is expected to use its advantages to quickly seize the new energy and integrated energy construction market, and the signing of new orders in related sectors is expected to continue to accelerate.
Investment analysis: Lowered the 24-year profit forecast, added a 25-26 profit forecast, and maintained the “gain” rating. Infrastructure investment is under pressure in the context of debt conversion. The company's order carry-over pace is expected to weaken at the same time, with the 24-year profit forecast being lowered, and the profit forecast for 25-26 years is expected to be 9.20 billion/ 10.03 billion/ 11.05 billion yuan (original value of 10.11 billion in 24 years), respectively. The corresponding PE is 10X/9X/8X, respectively. We believe that in the future, the energy engineering industry will still benefit from the support of double carbon investment and operation business while expanding the company's electricity investment and operation business Build a second growth curve and maintain the “gain” rating.
Risk warning: Economic recovery fell short of expectations, infrastructure investment fell short of expectations, and orders from listed companies fell short of expectations.