Introduction to this report:
In 2023, revenue of $633.9 billion increased 7.0%, net profit decreased 15.6%, net operating cash flow decreased 68%, accounts receivable increased 39%, and impairment losses totaled $8.95 billion ($4.96 billion for the full year of 2022). Planned revenue for 2024 increased 4.1%.
Summary:
Maintain the increase in holdings. [Earnings performance y] was lower than expected and the 2024 planned revenue growth rate was 4.1% according to the company's annual report. The 2024-2025 EPS0.45/0.48 (originally 0.65/0.73) yuan corresponding growth rate was lowered to 8%/7%, and the 2026 EPS 0.51 yuan growth rate was predicted to be 6%.
Net profit fell 15.6% in 2023, which fell 86.3% in 2023Q4. (1) Revenue of $633.9 billion in 2023 increased by 7.0% (Q1-Q4 increased by 22.4/11.0/23.2/ -14.9%), of which engineering contracts of 585.5 billion yuan increased by 9%, resource development of 6.8 billion yuan decreased by 23%, characteristic business of $32 billion increased by 0.2%, and comprehensive real estate of 16.5 billion decreased by 27%. Net profit of 8.67 billion yuan decreased by 15.6% (Q1-Q4 increased 25.8/20.6/15.0/ -86.3%).
(2) 2023 gross profit margin 9.69% (+0.05pct), expense ratio 5.72% (+0.01pct), net profit margin 1.37% (-0.37pct), weighted ROE 7.23% (-3.24pct), balance ratio 74.61% (+2.27pct).
Net operating cash flow fell 68% in 2023, and accounts receivable and impairment increased. (1) Net operating cash flow of $5.89 billion in 2023 ($18.15 billion for the full year of 22), Q1-Q4 was -215.6/70.4/-79.6/28.37 billion (-145.4/147.1/-1.774 billion in '22). In 2023, the payout ratio was 77% (22% for the whole year), and the payout ratio was 75% (84% for the whole year). (2) Total operating and investment cash flow - $8.3 billion ($11.59 billion for the full year). (3) Accounts receivable of 130 billion yuan increased by 39%, with impairment losses totaling 8.95 billion yuan (22 billion yuan of 4.96 billion), of which impairment of 5.994 billion yuan was accrued on accounts receivable; depreciation of 1,127 billion yuan was accrued on contract assets; some inventory costs have exceeded net realizable value, with an impairment value of 1,216 billion yuan; based on impairment tests on long-term equity investments, fixed assets, goodwill, etc., the calculation of impairment reserves of RMB 612 billion.
New orders increased by 6% in 2023, and the mineral resources business can be expected in the future. (1) In 2023, 1424.8 billion new signings increased by 6% (up 12% in the same period in '22). In 2023, 63.4 billion new overseas signings rose to a record high of 44%. (2) The Ruimu nickel-cobalt mine in Pakistan stores 1.26 million tons of nickel and 140,000 tons of cobalt, with an annual output of 33,604 tons of nickel and 3072 tons of cobalt; Pakistan's Shandak copper-gold mine stores 1.84 million tons of copper with an annual output of 17,000 tons of copper; Pakistan's Duda lead-zinc mine stores 330,000 tons of lead and 690,000 tons of zinc per year. The total profit of the three active mines was 1,214 billion yuan. (3) Copper reserves of 3.78 million tons were discovered at the Siadik copper mine in Pakistan, and 1.08 million tons in the Enak copper mine in Afghanistan. The above two mines were actively promoted in the early stages. (4) The 2024 plan is to achieve a 4.1% increase in revenue of 660 billion yuan and a 5.3% increase in the amount of new contracts signed by 1.5 trillion yuan. Risk warning: macroeconomic policy risks, overseas business risks, etc.