Core views
The company signed a new contract amount of 41.46 billion yuan in January-March, an increase of 17.2% over the previous year. The amount of new contracts signed continued the high trend of nearly half a year, achieving operating income of 28.96 billion yuan, an increase of 0.1% year on year, and the growth rate corrected in the first quarter; the amount of new contracts signed in March increased 54.4% year on year, and revenue increased 15.1% year on year. China's nuclear power construction continues to accelerate. From January to January 2024, investment in nuclear power construction increased 39.5% year on year. Brother company China Nuclear Power expects to invest 121.55 billion yuan in 2024, an increase of more than 50% year on year. The company will fully benefit from the acceleration of nuclear power construction.
occurrences
The company released operating data for January-March 2024. In January-March, the new contract amount was 41.46 billion yuan, up 17.2% year on year, achieving operating income of 28.96 billion yuan, up 0.1% year on year; new contract amount signed in March was 22.55 billion yuan, up 54.4% year on year, and revenue increased 15.1% year on year.
Brief review
New signings continued to grow at a high rate, and the cumulative revenue growth rate was corrected. The company signed a new contract amount of 41.46 billion yuan in January-March, an increase of 17.2% over the previous year, achieving operating income of 28.96 billion yuan, an increase of 0.1% year on year, and the revenue growth rate was corrected in 2024; in March, the new contract amount signed in a single month was 22.55 billion yuan, an increase of 54.4% year on year, continuing the high growth trend since September 2023, and revenue increased 15.1% year on year.
Nuclear power construction has accelerated, and the company has fully benefited. In 2023, there were 26 nuclear power units under construction in China, and 5 new units were started. The total investment in nuclear power project construction was 94.9 billion yuan, an increase of 20.8% over 2022, reaching the highest level in nearly 5 years. Nuclear power construction continued in 2024. In January-January, nuclear power investment increased 39.5% year on year. The company's brother company China Nuclear Power's 2024 investment plan was 121.55 billion yuan, an increase of 51.9% year on year. As the newly approved and started units in 2022/23 enter an intensive construction period, the company will fully benefit as a leading nuclear power construction enterprise.
A series of policy documents such as the “Nine Rules of the New Country” promote the realization of corporate value. The company's 2022 dividend rate was 13.6%. The “Nine Rules of the New Country” proposed formulating market value management guidelines for listed companies and strengthening cash dividend supervision. In conjunction with previous market value management, it is expected that in the future, with the implementation of the assessment plan, the company will pay more attention to value realization and investor returns. The dividend ratio is expected to improve, intrinsic value will increase further, and long-term undervalued value is expected to be re-valued.
Keep the purchase rating and target price of $8.94 unchanged. We lowered the company's 2023-2025 EPS to 0.67/0.76/0.84 yuan (the original forecast was 0.70/0.91/1.14 yuan), leaving the purchase rating and target price unchanged at 8.94 yuan.
Risk analysis
Nuclear power projects fall short of expectations: Nuclear power projects have large investment volumes, long construction cycles, and the need to consider nuclear safety and back-end spent fuel treatment. The impact of multiple factors may cause nuclear power projects to fall short of expectations, making capital turnover difficult.
Risk of continued growth in debt size: The company's balance ratio continues to be high and slightly upward, and the debt size continues to expand. If the company's repayments fall short of expectations and liquidity is tight, there may be some pressure to repay debts.
PPP investment and operation risk: The company's PPP project investment scale is large and the repayment cycle is long. If real estate falls and adjusts beyond expectations, it may further affect local revenue, causing delays in repayment of the company's PPP projects and falling short of expectations.