Description of the event
The company released its 2023 annual report, with revenue of 17.061 billion yuan in 2023, up 13.51% year on year; net profit to mother of 1.05 billion yuan, up 28.03% year on year; deducted non-net profit of 869 million yuan. Among them, 23Q4 revenue was 6.397 billion yuan, up 8.17% year on year; net profit to mother was 233 million yuan, up 70.2% year on year, after deducting 150 million yuan of non-net profit, up 68.63% year on year.
Incident comments
By sector, the company's 23 annual report adjusted the classification scale, adding new energy and system integration, and mainly transferred PCS, SVG, energy storage integration and new energy turnkey. The revenue of the sector in 2023 increased 42% year on year, with a gross margin of 5.42%; the revenue of the intelligent transmission and distribution sector reached 4.577 billion yuan, a slight decrease of 0.88% year on year, gross margin reached 22.66%, a slight decrease of 1.55 pct; the revenue of the smart medium voltage sector reached 3.14 billion yuan, with a stable gross margin of 3.14 billion yuan. The year-on-year increase was 14.25%, and gross margin increased by 1.32pct to 16.26%. At the same time, the company's overseas revenue in '23 was 150 million yuan, an increase of 98% over the previous year. It is expected to mainly benefit from the increase in exports of electricity meters and other products. In the end, the company achieved net profit of 1,005 billion yuan in 2023, an increase of 28.03% over the previous year. The company's profit growth rate exceeded the revenue growth rate.
In terms of expenses and cash flow, the company's 23-year expense rate was 10.9%, which remained stable; the sales rate was 2.88%, up 0.01pct year on year, mainly due to the increase in bidding expenses; the management rate was 3.54%, up 0.09pct year on year, affected by the increase in equity incentive expenses, etc.; and the R&D rate was 4.76%, down 0.19 pct year on year. At the same time, corporate debt restructuring proceeds, government subsidies, etc. will definitely contribute to non-recurring income, further boosting profit growth.
In addition, the company's net operating cash flow reached 2.7 billion yuan in 23, an increase of 1 billion yuan over the previous year, a significant increase over the previous year, mainly due to the increase in cash payments over the same period. The company's capital expenditure for 23 years was 6.77 billion yuan, reflecting that the company maintained strong production capacity construction efforts. Looking at a single quarter, the company's net operating cash flow inflow for 23Q4 was 1,279 billion yuan, a significant increase over the same period last year, reflecting the company's strong repayment ability. The company's R&D investment in '23 increased 13.60% year-on-year, in line with the revenue growth rate. At the same time, the capitalization ratio increased by 3.01 pct, reflecting the company's continuous increase in scientific and technological innovation efforts.
In 2023, the company explored the “second growth curve” and set up a hydrogen source technology branch to focus on IGBT hydrogen power supplies, hydrogen electric coupling, etc., to achieve the first set of orders for IGBT hydrogen power supplies. In the field of new energy, the company broke through key technologies such as unified consumption of clean energy across the entire network and collaborative interaction between network and load, and the new energy scheduling and control system was applied in Hubei. In the field of energy storage, industrial and commercial energy storage all-in-one machines, centralized energy storage control, and energy storage energy management systems achieved the first set of applications. In the field of offshore wind power, DC Control and Insurance won the bid for the German offshore wind power flexible project to achieve the transformation of high-end equipment from “introducing” technology to “going global”.
Looking ahead to the future market, the company's 24-year revenue target is 19 billion yuan. At the same time, the company's electricity meters and other overseas sales are accelerating. We expect the company to return to its mother about 1.15 billion yuan in 24 years, which is about 24 times the PE valuation. Maintain a “buy” rating.
Risk warning
1. The direction of grid investment falls short of expectations;
2. The DC project fell short of expectations.