Incident: The company announced that it achieved revenue of 12.365 billion yuan, an increase of 27.25%; realized net profit of 361 million yuan, an increase of 7.77%; and realized net profit of 441 million yuan without deduction of 48.72%. Among them, 2023Q4's revenue for a single quarter was 3.786 billion yuan, an increase of 59.54%; net profit to mother of 0.12 million yuan increased by 132.43%; net profit after deducting net profit of 21 million yuan to mother decreased by 84.48%. Non-recurring profit and loss was mainly due to floating losses of 105 million yuan from carrying out forward foreign exchange settlements.
International engineering revenue soared, and overseas business profits recovered. On a quarterly basis, the company's Q1-Q4 revenue was 27.89/23.79/3.411/3.786 billion yuan, with year-on-year changes of 9.08%/-4.08%/47.87%/59.54%, respectively; Q1-Q4 net profit to mother was 1.16/1.55/0.77/ 0.12 billion yuan, respectively, with a year-on-year change of 56.27%/-10.95%/-4.11%/132.43%, respectively. By business, the international engineering/domestic engineering/consulting design/equipment manufacturing/trade services business achieved revenue of 63.32/21.16/15.61/15.39/ 724 million yuan, respectively, with year-on-year changes of 67.93%/0.13%/9.91%/21.11%/-29.51%. The gross margins of the international engineering/domestic engineering/consulting design/equipment manufacturing business were 13.97%/4.44%/38.18%/22.90% year-on-year change of 4.62 pct/-2.21pct/4.58pct/ 0.77pct; By region, domestic/overseas revenue of 53.08/7.057 billion yuan respectively increased 8.36%/46.45%, of which overseas business revenue accounted for 57.07% and 7.48pct. Key execution projects in international engineering contracting progressed smoothly. Domestic/overseas gross margins of 20.65%/12.33% increased 1.29pct/4.01pct, respectively, and overseas business profit levels recovered.
Gross profit levels picked up year on year, and rising financial expenses dragged down net interest rates. The company's gross sales margin for the full year of 2023 was 15.90%, up 2.02pct; the period expense ratio was 10.29% and 2.38pct. Among them, the company's sales/management and R&D/ financial expense ratios were 2.20%/8.76%/-0.67%, and the year-on-year change was -0.39pct/-0.68pct/3.45pct. The financial expense ratio increased or mainly due to the year-on-year decrease in exchange income due to fluctuations in the US dollar exchange rate; the asset and credit impairment loss rate decreased by 0.64% and 1.16 pct; net profit margin to mother decreased by 2.92 % same drop 0.52 pct The company's net cash flow from operating activities during the period was $233 million, down from the same period last year; the revenue ratio decreased by 2.78 pct from the same period last year; the amount of accounts receivable and notes, inventory+contract assets, accounts payable and notes, accounts payable and notes, advance accounts receivable and contract liabilities as of the end of 2023 was $55/37/53/3.3 billion, a year-on-year change of 20.66%/-10.91%/21.84%/-16.86% from the beginning of the year.
There has been a steady increase in new orders, and overseas business continues to expand. For the full year of 2023, the company signed a total of US$3.155 billion, an increase of 6.16%, achieving steady growth. Among them, the total number of new contracts signed for international engineering was US$2.399 billion, and the total contract amount for international engineering contracts was US$9.072 billion by the end of 2023; the total number of new contracts signed for domestic engineering contracting and consulting and design business was RMB 1,327/2,188 billion yuan, a decrease of 47.5%/5.4%; the total number of new signings for equipment R&D and manufacturing business was RMB 1,815 million, with a total of 0.8%, of which the total contract amount for overseas ropeway projects reached 170 million yuan; the total number of new contracts signed for engineering investment and operation was RMB 275 million. The total agreed investment of enterprises entering the park was 1,440 billion US dollars, and a total of 44 companies were put into operation. The number of new companies entering the park each year, land sales area, and plant rental rates all reached record highs. 2023Q4, the first livelihood project signed by the company in the framework of cooperation between the Chinese and Indonesian governments, has officially entered into force and commenced. China's RMB sovereign commercial loan project, the Uzbek Olympic City project in Ushou, is also progressing smoothly. The signing and implementation of major projects has laid the foundation for future output value growth.
Investment advice: We expect the company to achieve operating income of 139.69/156.42/17.263 billion yuan and net profit to mother of 4.59/5.53/672 billion yuan in 2024-2026. The closing price on April 9 was 20.01/16.60/13.66 times PE, respectively, maintaining the “gain” rating.
Risk warning: Future investment returns fall short of expectations, risk of geopolitical fluctuations, risk of macroeconomic downturn.