Event: The company released its 2023 annual report.
Revenue is growing steadily, and production of steel structure products is growing rapidly. In 2023, the company achieved revenue of 23.539 billion yuan, an increase of 18.60% over the previous year, of which steel structure sales revenue was 23.222 billion yuan, accounting for 98.65% of revenue; steel structure engineering revenue was 317 million yuan, accounting for 1.35% of revenue. Revenue growth was mainly due to the company increasing production capacity through intelligent transformation and gradually releasing production capacity from new production bases. In 2023, the company achieved net profit of 1,179 million yuan, an increase of 1.43% over the previous year; realized net profit of 874 million yuan after deduction, a decrease of 4.72% over the previous year. In 2023, the company signed new sales contracts totaling about 29.712 billion yuan, an increase of 18.25% over the previous year; the output of steel structure products was 4.488 million tons, an increase of 28.40% over the previous year.
Gross margin declined slightly, and operating cash flow performance was impressive. The company's gross margin in 2023 was 11.13%, down 0.85pct from the same period last year, and the net profit margin was 5.01%, down 0.85pct from the same period last year; the company's net operating cash flow in 2023 was 1,098 million yuan, an increase of 475 million yuan over the previous year, up 76.36% year on year, mainly due to large repayments; net cash flow outflow from investment activities was 1,655 million yuan, an increase of 160 million yuan over the previous year, mainly due to the small return on assets disposed of in the current period. R&D expenses for the full year of 2023 were 700 million, an increase of 51.62% over the previous year, mainly due to an increase in R&D investment projects.
Continue to increase investment in R&D and accelerate the pace of intelligent transformation. The company attaches importance to intelligent transformation technology, and has set up a special intelligent manufacturing R&D team in 2021. In 2023, the company continued to increase its investment in R&D. During the reporting period, it developed or introduced advanced equipment including fully automatic steel plate cutting and distribution production line, intelligent four-chuck laser cutting machine, intelligent four-chuck laser cutting machine, intelligent three-dimensional five-axis laser cutting machine, intelligent steel secondary processing line, BOX production line, intelligent welding production line for stairs and embedded parts, intelligent industrial welding robots, portable lightweight welding robots, and automatic spraying lines. With the successive expansion and commissioning of the company's top ten steel structure production bases, digital upgrading of equipment, intelligent production transformation, and intelligent informatization construction, etc., the company's steel structure production capacity will be further increased, production efficiency will be further improved, and delivery capacity and cost control capabilities will be further strengthened. In 2023, the company developed a “lightweight arc welding robot intelligent welding system”, which has the ability to integrate ground-rail intelligent welding workstations. Currently, the company's top ten production bases have put into use a small number of Honglu lightweight intelligent welding robots and ground-rail-free intelligent welding workstations integrated with their own, which is expected to help the company increase production capacity, improve product quality, and reduce costs.
Investment advice: The company's 2024-2026 revenue is expected to be 26.490 billion yuan, 29.568 billion yuan, and 32.730 billion yuan respectively, up 12.54%, 11.62%, and 10.69% year-on-year respectively. Net profit to mother is 1,267 billion yuan, 1,416 billion yuan, and 1,577 billion yuan, respectively. EPS is 1.84 yuan/share, 2.05 yuan/share, and 2.29 yuan/share, respectively. The PE corresponding to the current stock price is 9.49 times, 8.49 times, and 7.63 times, maintaining the “recommended” rating.
Risk warning: Risk of order fulfillment falling short of expectations; risk of accounts receivable recovery falling short of expectations.