Revenue performance was slightly pressured, focusing on marginal changes in clean energy installations. The company completed the asset restructuring of the construction engineering group in '23, achieving operating income of 80.883 billion yuan, a net profit of -2.07% year over year, net profit to mother of 1,534 billion yuan, -10.27% year over year, net profit after deducting non-return mother of 1,556 billion yuan, or -5.01% year over year, mainly due to factors such as demolition work and investment progress of some engineering construction projects, which led to a slowdown in construction progress. The company's 24-year business targets are expected to achieve operating income of 87.7 billion yuan, net profit to mother of 1,578 billion yuan, and clean energy to put into operation 1.5 million kilowatts of installed capacity. We expect the high-margin clean energy power generation business to gradually increase the company's performance in the future. In addition, the company's cash dividend amount in '23 was 580 million yuan, with a cash dividend ratio of 37.9%. The dividend rate corresponding to the close of April 15 was 3.85%. It is recommended to focus on medium- to long-term investment values.

Looking at the business segment where orders are abundant and power generation & equipment manufacturing has built a second growth curve,

1) Engineering sector: Project construction revenue in 23 years was 74.2 billion yuan, -3.4%. Among them, housing construction, water and hydropower, municipal engineering, and other projects achieved revenue of 203, 187, 265, and 8.6 billion yuan respectively, +4.8%, -9.2%, and +8.5% year-on-year respectively. The scale of in-hand engineering orders reached 182.3 billion yuan at the end of the year. Survey, design and consulting services achieved revenue of 850 million yuan in 23 years, -2.8% compared with the same period last year.

2) Clean energy generation: The revenue of the power generation sector in '23 was 2.04 billion yuan, +8.2% year-on-year. Among them, wind power, solar energy, and hydroelectric power generation achieved revenue of 8.3, 7.8, and 420 million yuan respectively, -2.0%, +38.7%, and -10.3% year-on-year respectively. At the end of 23, the total installed capacity of the project was 3.9 GW, of which 0.72, 2.80, and 0.38 GW were installed in the project, respectively.

3) Equipment manufacturing: Achieved revenue of 3.29 billion yuan in 23 years, +29.3% year-on-year. At the end of '23, 460,000 square meters, 16 tower production lines, and 11 photovoltaic stent production lines were built, with an annual design capacity of about 300,000 tons.

The gross margin of the equipment manufacturing business improved markedly, driving a steady increase in profitability in 23. The gross margin of the company was 9.3%, +0.9pct year on year. Among them, the gross margins of the three sectors of engineering, power generation, and equipment manufacturing were 7.3%, 55.5%, and 18.3%, respectively, +0.4, -3.1, and +9.1 pct, respectively. The gross margin of the engineering sector was steady, moderate and positive. At the same time, we determined that the release of production capacity led to a rapid rise in gross margin of the equipment manufacturing business, leading to an increase in overall gross margin. The company's expense ratio for the 23-year period was 5.96%, +0.45pct year on year. Among them, sales/management/R&D/finance expenses were flat, +0.2/+0.17/+0.08pct, respectively. The total asset and credit impairment losses totaled 576 million yuan, an increase of 260 million yuan over the previous year. Under the combined influence, the net interest rate was -0.14 pct to 1.99% year on year. The net amount of the company's CFO in '23 was 2.37 billion yuan, down inflows of 420 million yuan year on year, and the balance ratio was -0.32 pct year on year to 89.39%.

Continue to be optimistic about medium- to long-term growth and maintain a “buy” rating

Considering the slight pressure on the company's results in '23, it fell short of our previous expectations. We expect the company's net profit to be 16.4/17.7/1.95 billion yuan in 24-26 (the value was 19.9/2.31 billion yuan 24-25 years ago), +6.8%/+8.1%/+10.1% year-on-year, respectively, maintaining the “buy” rating.

Risk warning: Project order settlement speed falls short of expectations, clean energy installation scale falls short of expectations, regional competition intensifies, and infrastructure investment falls short of expectations.