Incident: The company released its 2023 annual report, achieving operating income of 37.087 billion yuan, -7.79%; net profit to mother of 3.477 billion yuan, -4.30%; net profit after deducting non-return to mother of 3.266 billion yuan, -4.41% year over year; comprehensive gross profit margin of 25.76%, +2.06 pct year on year; sales expenses/management expenses/R&D expenses were 8.93/23.36/1,862 billion yuan respectively, accounting for 2.41%/6.3%/5.02% of revenue.
The company achieved a high increase in revenue from rail transit control system design and integration business. Looking at the revenue segment, the company's rail transit control system business achieved revenue of 29.262 billion yuan, -0.50%; of these, design integration achieved revenue of 11.724 billion yuan, +20.16% year over year, system delivery service revenue of 11.425 billion yuan, -18.83% year over year, and equipment manufacturing achieved revenue of 6.113 billion yuan, +9.64% year over year. General engineering contracting achieved revenue of 7.674 billion yuan, -28.48% year-on-year.
The company has sufficient orders in hand, and the growth rate of new overseas business contracts is remarkable. The total number of new contracts signed by the company in 2023 was 73.121 billion yuan, up 0.15% over the same period in 2022, including: the railway sector was 25.112 billion yuan, up 5.01% year on year; the urban rail sector was 13.18 billion yuan, up 3.91% year on year; the overseas sector was 3.74 billion yuan, up 45.18% year on year; and general engineering contracting and other fields were 31,089 billion yuan, down 8.11% year on year. By the end of 2023, the company had orders of 168.831 billion yuan.
In terms of the railway “four power” business, the company seizes opportunities, plans ahead of schedule, rationally deploys, and promotes overall upgrading. In the field of high-speed rail weak current system integration, the company has successively carried out 11 projects including Xiongxin, Xicheng, Yuqian, Xiangjing, and Xi10, with a market share of over 60%, further expanding its leading edge in the market. In the field of urban rail traffic signal system integration, competitors have further increased, and the competitive situation is more severe. However, the company's subsidiary Casco and Urban Transport Company are still at the top of the control system industry, successively taking over more than 10 projects in cities such as Ningbo, Tianjin, Shenzhen, Changchun, Hefei, Shanghai, Suzhou, and Wuhan, stabilizing their leading position in the industry. In terms of general engineering contracting business, on the basis of ensuring the quality of project contracting, it plays a leading role in design and technology, strengthens project contract construction capabilities, comprehensively enhances resource integration, management and risk prevention and control capabilities throughout the industry chain, reasonably controls general engineering contracting projects, and adjusts the contract contracting structure. In overseas markets, the signing ceremony for the Bangura-Nkaya renovation project in Malawi was completed, and orders were successively received from Malaysia, France and other places.
Profit forecast: The company is expected to achieve net profit of 38.72, 42.11, and 4.593 billion yuan from 2024 to 2026, covered for the first time, and given a “buy” rating.
Risk warning: Industry development, company business progress, profit forecasts and valuations fall short of expectations.