Event: After the market on April 12, the company released its 2023 annual report

Annual report performance exceeded expectations. Net profit to mother was 207 million yuan in 2023, up 33.33% year on year. In 2023, the company achieved operating income of 1,105 billion yuan, up 38.17% year on year; net profit to mother was 207 million yuan, up 33.33% year on year. The rapid year-on-year increase in revenue and profit is mainly due to increased revenue from overseas business and new products. By industry, the wind power industry's revenue was 1,083 billion yuan, up 36.73% year on year; other industries were 12.3 million yuan, up 606.97% year on year. By product, revenue from high-altitude safety lifting equipment was 763 million yuan, up 40.34% year on year; revenue from high-altitude safety protection equipment was 287 million yuan, up 48.47% year on year; and revenue from aerial safety operation services was 45.42 million yuan, down 19.64% year on year. By region, the domestic market achieved revenue of 553 million yuan (accounting for 50.9% of revenue), an increase of 14.99% over the previous year; the overseas market achieved revenue of 542 million yuan (accounting for 49.1% of revenue), an increase of 60.03% over the previous year.

2022Q4 achieved revenue of 405 million yuan in a single quarter, up 70.48% year on year and 56.85% month on month; net profit to mother was 88.29 million yuan, up 281.28% year on year, up 140.06% month on month.

Gross margin increased by 2.46 pct year on year in 2023; due to new business expansion needs, net profit margin decreased by 0.69 pct year on year. Profitability: The gross margin of sales in 2023 was about 46.13%, up 2.46 pct year on year, mainly due to the fact that the gross margin of overseas business was higher than that of the domestic market, which contributed to the increase in revenue share. The net sales margin in 2023 was about 18.73%, down 0.69pct from the previous year, mainly due to the rapid increase in R&D expenses, sales expenses and management expenses due to new business expansion. The gross profit margin of 2022Q4 sales in a single quarter was 46.21%, up 0.96pct year on year and 0.8 pct month-on-month. The main reason is that the gross margin of overseas business is higher than domestic, contributing to the increase in revenue share. The net profit margin on sales was 21.79%, up 12.05 pcts year on year and 7.55 pcts month on month, mainly contributing to the decline in the cost ratio during the period.

Expense side: The cost rate during 2023 was 27.89%, an increase of 1.62 pct over the previous year. This is mainly due to the increase in sales and R&D expenses due to new business expansion, compounded by the increase in financial expenses. Among them, sales, management, R&D, and financial expense ratios were approximately 13.6%, 8.65%, 8.57%, and -2.94%, respectively, with year-on-year changes of -0.32, +0.88, -0.42, and +1.48pct, respectively.

Leading wind power safety equipment leader, strong domestic wind power+overseas and multi-field expansion opens up room for growth 1) Overseas market expansion: ① Looking at the stock market, the North American and European markets all have large inventory transformation needs, and can enjoy the blue ocean market of overseas stock transformation; ② Looking at new markets: the company has more room for improvement in overseas markets compared to domestic markets. The transformation of overseas stock markets and an increase in market share in new markets are expected to give the company room for incremental performance.

2) Expansion in multiple fields: The company's products are moving towards platform-based enterprises in multiple fields, such as industry and construction, emergency rescue, power grids, etc. At present, many new products have been launched in emerging fields. Among them, material conveyors and tower climbers are expected to become the company's next best products. ① Material conveyors: The application field is overseas household photovoltaic construction. Overseas labor costs are high. Equipment can help construction teams reduce labor costs and is expected to become standard for construction teams; ② Tower cranes:

Tower cranes are the main application scenario. Currently, there are tower cranes in stock that have not yet been equipped with lifting equipment. As labor dividends decrease and emphasis on life safety increases, tower cranes are expected to be equipped with additional lifting equipment. The expansion of application fields will be an increase in the company's medium- to long-term development.

3) Increased demand in the domestic wind power market: ① Demand for new installed wind power: In 2023, the domestic public tender market added 86.27 GW of tenders, a year-on-year decrease of 12.5%, maintaining a high level. According to CWEA forecasts, in 2024, the new lifting capacity of domestic wind power was about 75GW-85GW, a rapid increase over the previous year; ② Product/solution optimization and iteration brought about an increase in the value of single fan product configuration. 1. Product iteration: The company launched a high-load lift and rack and pinion lift, which is significantly higher in price compared to ordinary lifts; 2. Solution optimization: The company launched a “dual tower climbing” solution, that is, a lift+no crawler/climber, which increases the value of single fan configuration products; ③ Aftermarket demand: The wind power operation and maintenance market space is broad, which is expected to provide growth points for the company's medium- to long-term performance.

Profit forecast and valuation: Optimistic about the company's major development in the field of wind power and emerging applications, the 2024-2026 net profit is estimated to be $2.7, 360, and 4.4 billion, up 30%, 33%, and 23% year-on-year, with CAGR = 28%. The corresponding PE is 22, 17, and 14 times, maintaining the “buy” rating.

Risk warning: 1) New domestic wind power installations fall short of expectations; 2) Expansion in overseas and other fields falls short of expectations.