High performance growth and high-quality development. The company released its 2023 financial report, and both revenue and profit increased; in '23, the company achieved revenue of 47.075 billion yuan, an increase of 13.1% year on year; realized net profit to mother of 3,506 billion yuan, an increase of 52.0% year on year. The company's traditional sector still maintains an advantage. Truck cranes of 25 tons and above rank first in the industry in terms of sales volume, and crawler cranes of 500 tons and above rank first in the industry; the sales scale of construction hoisting machinery steadily ranks first in the world, and R tower cranes form the scale coverage of the market. While maintaining traditional business advantages, the company's business in the emerging sector is growing rapidly, and the company's products such as earthwork, high machinery, and mining machinery are progressing rapidly.
Overseas markets resonate with emerging sectors, and the company's profit margin has risen further. The company's total overseas revenue in '23 reached 17.905 billion yuan, up 79.2% year on year. In '23, the company's overseas revenue accounted for 38%. Effective breakthroughs were achieved in key markets. Localized development strategies in key countries achieved remarkable results, and the product market share increased rapidly. The company has established an “end-to-end, digitized, and localized” overseas business system, which is compounded by a high increase in the number of products in the emerging sector going overseas, and is optimistic about the sustainability of future overseas market expansion. The company's gross margin in the overseas market reached 32.2% in '23, which is higher than 7.5 pct higher than the domestic market. The increase in overseas revenue share, combined with cost savings from the company's smart industrial city, etc., the company's overall gross margin/net margin reached 27.5%/8.0% in '23, up 5.7 pct and 2.3 pct respectively from '22, and profit margins gradually improved. The company's proposed dividend amount reached 2.78 billion yuan based on 23 years of profit, and the dividend ratio for that year reached more than 79% of profit.
Profit forecasting and investment advice. The company's revenue is estimated at 561/673/79.4 billion yuan in 24-26 years. The company is a leading domestic construction machinery company. Considering the company's high export growth rate and marginal upward trend, growth in the new sectors of earthwork, high machinery, etc. can be expected. Referring to comparable company valuations, the company was given 18 times PE in 24 years, corresponding to a reasonable value of 9.92 yuan/share. Considering the premium situation and exchange rate situation of A/H shares, the reasonable value of H shares is HK$6.18 per share, giving A/H shares a “buy” rating.
Risk warning. Competition in the industry is intensifying, and there is a risk that the price war will not be mitigated; the risk that overseas market expansion will fall short of expectations; the risk that the domestic market recovery will fall short of expectations.