Maintain an increase in holdings. 2023 revenue of 122.98 billion yuan/ -12.9%, net profit to mother of 1.03 billion yuan/ +12.8%.
Considering that the supply chain business is affected by the macroeconomic environment at home and abroad, the forecast EPS growth rate was lowered to 0.83/0.93 yuan (originally 0.89/0.99 yuan) in 2024-25, and the EPS growth rate of 1 yuan is 8% in 2026; using segmentation and absolute valuation methods, the target price is maintained at 10.89 yuan to maintain growth.
The 2023Q4 revenue growth rate was corrected, and the optimization of the business structure promoted the improvement of profitability. 1) The revenue growth rate for the single quarter of 2023 was 1/-27.1/-17.7/ 2.8%, respectively, the net profit growth rate was 17.5/9/14.8/ 6.7%, respectively, and the net profit growth rate was 5.9/-0.6/3/ 57.9%, respectively; 2) Net operating cash flow of 2.78 billion yuan/ -55%, due to the decline in the scale of supply chain operations, the decline in bank note usage, and the maturity and payment of notes payable at the beginning of the period; 3) gross profit margin 5.69% /+0.83pct, net profit margin 2.52% /+0.48pct, which also confirmed the improvement in the month-on-month business structure, Core sector profitability strengthened; ROE 15.75% /+0.42pct.
The advanced manufacturing sector performed well, and diesel generator sets and shipbuilding grew rapidly. 1) Supply chain business of 91.39 billion yuan/ -17.4% in 2023, accounting for 74%, large consumption of 11.07 billion yuan/ +3.97% accounting for 9%, advanced manufacturing 9.04 billion yuan/ +8.2% accounting for 7.4%, environmental protection 6.59 billion yuan/ -11.5% accounting for 5.4%; 2) Industrial chain profit contribution of 63% /+5pct; 3) Diesel generator set revenue of 1,126 million yuan/ +88.8%; 4) Shipbuilding seized the opportunity of tight global dry cargo capacity and launched the Crown 63 3.0 series with total delivery throughout the year Nineteen ships have achieved revenue of 4.443 billion yuan/ +21.7%; currently, 66 ships are on hand, and are scheduled to reach the end of 2026. We are optimistic about the increase in profit margins and profit contributions.
The undervaluation is high in dividends, and the benchmark for central enterprises is steady and far-reaching. 1) The company is a central enterprise China Machinery Group holding company. The majority shareholder/brother unit has strong resource endowments, actively implements national reform, promotes dual chain development, accelerates digital transformation, and has incentives for key employees. The net profit CAGR has exceeded 23% in the past 3 years; 2) The proposed dividend of 431 million yuan in 2023, with a dividend rate of 41.9%. Currently, PE is only 10.6 times undervalued; 3) The total import and export volume of US$5.06 billion to the Belt and Road has increased.
Risk warning: commodity price fluctuations, economic fluctuations, shocks from other competitors, etc.