The company released its 2023 annual report. In 2023, the company's revenue was 22.863 billion yuan, down 8.17%; net profit to mother was 645 million yuan, up 16.11%; EPS was 0.49 yuan, up 16.87%. In 2023, the company's strategic regional business development was very effective, and the on-hand order reserves were sufficient; introducing Conch Cement as a strategic investor is expected to help the company achieve overall improvement. Maintain the company's buy rating.
Key points to support ratings
Net profit to mother bucked the trend, and cash flow remained stable throughout the year. In 2023, the company's revenue was 22.863 billion yuan, down 8.17%; net profit to mother was 645 million yuan, up 16.11%; EPS was 0.49 yuan, up 16.87%. The company's net profit bucked the trend in 2023. 2023Q4's revenue was 6.522 billion yuan, down 2.06%; net profit attributable to mother was 290 million yuan, turning a year-on-year loss into a profit. In terms of cash flow, the company's net operating cash flow in 2023 was 329 million yuan, a decrease of 2.89%. 2023Q4's net operating cash flow was $1,932 million, a decrease of 29.44%.
The company's profitability increased year over year. In 2023, the company's gross margin was 11.34%, up 0.75pct; net profit margin to mother was 2.82%, up 0.59pct. 2023Q4's gross margin was 13.91%, an increase of 4.91 pct; the net profit margin to mother was 4.44%, turning a loss into a profit year over year. The company's expense ratio for the 2023 period was 6.31%, an increase of 0.57pct.
Among them, the sales/management/R&D/finance expense ratio increased by 0.08/0.04/0.20/0.25pct, respectively. The 2023Q4 company's fee rate for the period was 6.47%, a decrease of 0.53 pct.
Commercial Concrete has signed contracts and the number of sales parties has grown steadily, and the company's order reserves are sufficient. In 2023, the company's commercial concrete contract volume was 13.82417 million square meters, an increase of 8.16%; the sales volume was 58.4314 million square meters, an increase of 4.43%. According to our estimates, the single-party price of the company's commercial concrete in 2023 was 379.06 yuan, a decrease of 54.19 yuan/square meter; the single-party gross profit was 42.69 yuan, or 2.20 yuan/square meter. The difference between the company's commercial concrete contract volume and sales volume in 2023 was 79.81 million square meters, an increase of 11.07%; the difference between the amount of new contracts signed and operating income was 35.15 billion yuan, an increase of 5.19%. The company has sufficient reserves of on-hand orders, and if downstream demand is boosted, it is expected to quickly turn into performance.
Strategic regional market development has been very effective, and the implementation of fixed increases has helped the company further improve. In 2023, the company achieved 63.55 million square meters of contracts in strategic regions, an increase of 21% over the previous year, accounting for 46.3% of the company's contract volume. Sales volume in the Beijing, Shanghai and Guangdong regions grew rapidly, with year-on-year increases of more than 60%. The company introduced Conch Cement as a strategic investor. The two sides will cooperate in various areas such as raw material procurement, concrete, gravel aggregates, logistics and transportation, and the company is expected to be fully upgraded.
valuations
Considering that the company and Conch Cement will cooperate in various fields, the company is expected to gain advantages in various areas such as raw material procurement, concrete site construction, logistics and transportation in the future, so we should adjust the company's profit forecast. The company's revenue for 2024-2026 is estimated to be RMB 244.9, 26.39, and RMB 28.75 billion, with net profit attributable to mother of RMB 7.6, 8.8, and RMB 1.01 billion, respectively; EPS of 0.60, 0.69, and 0.80 yuan. Maintain the company's buy rating.
The main risks faced by ratings
The implementation of infrastructure fell short of expectations, the results of business expansion fell short of expectations, and the results of strategic cooperation fell short of expectations.