In 2023, the company's net profit to mother increased significantly, and profitability continued to increase. ① The 23Q4 company's revenue was 1,895 million yuan, +21.59% YoY, +0.79% month-on-month, and net profit to mother was 171 million yuan, +48.76% YoY, +20.56%. Revenue for the full year of '23 was 6.668 billion yuan, +40.5% YoY, and net profit to mother was 505 million yuan, +78.15% YoY. ② 23Q4 gross profit margin 24.45%, YoY +2.09pct, month-on-month +1.67pct, net profit margin 8.96%, YoY +1.57pct, +1.45pct month-on-month. 23 Annual gross profit margin of 22.81%, +2.52 pct year on year, net profit margin 7.53%, +1.56 pct year on year. We believe that the main factors are: 1) digital production to improve output efficiency; 2) increase the share of high-margin overseas business. The cost rate for the 23Q4 period was 15.04%, -1.26pct year-on-year, and +2.17pct month-on-month. 23 The cost rate for the full year was 13.36%, +0.05pct year-on-year.
Overseas+ energy storage orders are increasing, and digital manufacturing+technological innovation is leading long-term development. (1) The company's export revenue in '23 was 1,177 billion yuan, +79.54% year-on-year. The company's overall sales order was 7.832 billion yuan (excluding tax), +35.14% year over year. Among them, export orders amounted to 19.91 billion yuan, +119.18% year-on-year. Nearly 100 new overseas customers have been added and expanded in 23 years, and sales in the overseas business have grown rapidly in various fields such as power generation and power supply, industrial electrical support, and new infrastructure. (2) The company carried out digital layout ahead of schedule, and has now completed the construction of digital factories at Haikou, Guilin and Wuhan bases. Recently, the company signed new digital orders totaling 229 million yuan (tax included). As of 2024/3/21, the cumulative number of digital business orders exceeded 600 million yuan. (3) In 2023, the company invested 351 million yuan in R&D, +42% year-on-year, with remarkable product development results. In terms of transformers, we can provide liquid immersion transformers of 145 kV or less and a capacity of 60 MVA or less, which are widely used in various fields such as new energy, data centers, and industrial electrical equipment. (4) In terms of energy storage, core technologies such as medium- and high-voltage direct-mounted energy storage systems have been added, and new energy storage orders of 641 million yuan (excluding tax) were received in '23, +114.87% compared to the same period last year.
The company's net operating cash flow improved significantly in 2023. By the end of '23, the company had inventory of 1,736 billion yuan, +0.16% year on year, 887 million yuan of construction projects, -84.48% year on year, fixed assets of 1.83 billion yuan, +149.39% year on year, accounts receivable of 2,625 billion yuan, +44.48% year over year. 23 Net operating cash flow for the full year was $205 million, +296.69% over the same period last year, of which $445 million in a single quarter was +721.28%. The main factors are: 1) Reduce the use of inventory funds through lean digital inventory management; 2) This is due to increased payment collection and increased cash inflows in the current period.
Profit forecasting and valuation. It is estimated that in 2024-2025, the company's net profit to mother will be 785 million yuan and 1,071 million yuan respectively, corresponding to EPS of 1.83 and 2.50 yuan/share. Considering the company's leading position in the field of dry-type transformers and the development potential of overseas business, the company was given a 2024 23-28X PE with reference to comparable company valuations. The reasonable value range was 42.09-51.24 yuan, giving it a “superior to the market” rating.
Risk warning. The risk of changes in trade policies, the risk of raw material price increases, and competition increases the risk.