Core views
Affected by the macroeconomic situation, the company's supply chain business revenue and profit contribution declined. Due to the company's diversified business layout, the industrial chain business remains resilient, and its contribution to the company's profit continues to increase. In particular, in the booming shipbuilding, shipping, and diesel generator business, the large consumer business is steadily expanding. The contribution to the company's profit increased from 23.4% in 2022 to 27.2% in 2023, making it one of the most important sources of profit for the company. The company's 2023 dividend ratio was 41.88%, actively giving back to shareholders.
occurrences
In 2023, the company achieved operating income of 122.981 billion yuan, -12.87% year on year; realized net profit of 1,030 billion yuan, +12.80% year over year; realized net profit without deduction of 832 million yuan, +9.05% year on year.
With 2023Q4, the company achieved operating income of 26.919 billion yuan, +2.82% year on year; realized net profit of 135 million yuan, +6.67% year over year; realized net profit of 129 million yuan after deduction, +57.86% year on year.
Brief review
In China's trade structure in 2023, trade performance in the “Belt and Road” region was good, and the company actively grasped the corresponding opportunities. In 2023, China's total import and export value was RMB 41.76 trillion, up 0.2% year on year. Among them, exports amounted to 23.77 trillion yuan, an increase of 0.6%; imports amounted to 17.99 trillion yuan, a decrease of 0.3%. Among them, imports and exports to the “Belt and Road” countries were 19.47 trillion yuan, an increase of 2.8%, accounting for 46.6% of the total import and export value, while imports and exports to Latin America and Africa amounted to 3.44 trillion yuan and 1.98 trillion yuan respectively, up 6.8% and 7.1%, respectively.
The company is deeply involved in trade in the “Belt and Road” region. In 2023, the company achieved a total import and export volume of about US$12.6 billion, and a total import and export volume of US$5.06 billion to the “Belt and Road” countries and regions, accounting for about 40% of the company's total import and export volume.
Advanced manufacturing remains booming, and the consumer industry's profit contribution continues to increase. 1. Supply chain business: The supply chain business achieved revenue of 91,393 billion yuan, -17.41% year-on-year, and realized total profit of 1,453 billion yuan, or -9.49% year-on-year.
2. Industrial chain business: The industrial chain sector achieved revenue of 31.318 billion yuan, +3.27% year-on-year, and total profit of 2,505 billion yuan, +15.02% year-on-year. (1) The large consumer sector achieved revenue of 11.075 billion yuan, +3.97% year over year. Among them, clothing business revenue was -2.42%, household textile revenue +15.35% year over year, and brand school uniform revenue +16.94% year over year. (2) The environmental protection sector achieved revenue of 6.586 billion yuan, or -11.53%. Among them, the clean energy business revenue was -14.76% year-on-year, and the ecological and environmental protection business revenue was -2.69%.
(3) The advanced manufacturing business achieved revenue of 9.037 billion yuan, an increase of +8.15% over the previous year. Diesel generator business revenue was +88.79% year over year, and shipbuilding and shipping revenue were +21.74% year over year. The company's share of total industrial chain business profit rose from 58% in 2022 to 63% in 2023, with clean energy business accounting for 10.27% of total profit and clothing business accounting for 12.71% of total profit, driving the company's profitability increase.
Affected by the macroeconomic situation, the company's supply chain business revenue and profit contribution declined. Due to the company's diversified business layout, the industrial chain business remains resilient, and its contribution to the company's profit continues to increase. In particular, in the booming shipbuilding, shipping, and diesel generator business, the large consumer business is steadily expanding. The contribution to the company's profit increased from 23.4% in 2022 to 27.2% in 2023, making it one of the most important sources of profit for the company.
The shipping business is booming, and China's industrial upgrading is driving the development of large-scale diesel generator business. In 2023, the company's shipping business continued to deepen cooperation with high-quality customers. It signed long-term lease agreements for 12 new Crown 63 3.0 new ships with Cargill, a leading global trading company, and long-term lease agreements for 10 new Crown 63 3.0 ships with Glencore. Benefiting from the industry trend of “East Digital and Western Computing” and high-end equipment manufacturing upgrades, in 2023, the company undertook a number of projects with domestic operators, data centers, power plants, etc., driving the rapid growth of the company's large-scale diesel generator business.
Continue to maintain a high dividend ratio and give back to shareholders. The company plans to distribute a cash dividend of 3.30 yuan for every 10 shares to all shareholders. As of December 31, 2023, the total share capital of the company was 1,306,749,434 shares. Based on this, the total proposed cash dividend was 431,227,313.22 yuan. The company's cash dividend ratio for 2023 was 41.88%. Based on the closing price on April 12, 2024, the dividend rate was 3.8%.
Investment advice: The company is expected to achieve net profit of 1,127 billion yuan, 1,245 billion yuan, and 1,359 billion yuan in 2024-2026, with year-on-year growth rates of +9.42%, +10.49%, and +9.15%, respectively. The current stock price corresponds to PE of 10X, 9X, and 8X, respectively, maintaining the “increase in holdings” rating.
Risk analysis
1. The global economy is complex and changing, and trade protection has intensified: trade protection and trade frictions have intensified, and the company's export products are easily restricted, affecting business performance.
2. Geopolitical risk: The company's overseas business accounts for a relatively large share. It has factories, offices and project departments in some overseas regions. Geopolitical tension causes the company to face safety risks and operating risks. 3. Risk of exchange rate fluctuations: Fluctuations in the RMB exchange rate will affect the company's export or imported product sales, and have an uncertain impact on the company's overseas business. 4. Increased competition risks that business development falls short of expectations: In a tough economic environment, market competition intensifies, model innovation accelerates, and the company faces the risk that the breadth and depth of business development falls short of expectations.