Net profit returned to mother increased year-on-year in '23
In 2023, the company achieved revenue of 1,771 billion yuan, +17.59% year on year, net profit to mother of 607 million yuan, +28.64% year over year, and the performance achieved relatively rapid growth. Considering the intensification of domestic electricity meter bidding competition, which may lead to a decline in the company's market share, we revised the company's revenue assumption. The company's net profit for 24-26 is 6.16/7.25/884 million yuan respectively (previous value of 7.08/870 million yuan in 24-25 years). Referring to the comparable company's PE 13.1 times PE in 24 years, the corresponding target price of 15.85 yuan (previous value 15.90 yuan) is maintained.
Profitability continues to improve, and fee reduction effects are remarkable
The company achieved revenue of 1,771 billion yuan and net profit of 607 million yuan, corresponding to 4Q23 net profit of 165 million yuan, or -6.96%/+22.35% year-on-year. The company's gross profit margin in '23 was 44.83%, +5.8 pct year on year, net profit margin 34.38%, +2.3 pct year on year. The cost rate for the 23-year period was -0.81 pct to 13.08% year on year. Among them, sales, management, R&D, and finance expenses rates were -1.02 pct, -0.14 pct, -0.25 pct, and +0.60 pct, respectively. The company's overall expense ratio declined year on year, showing good cost control capabilities; the increase in the financial expense ratio was mainly due to a decrease in exchange earnings. Net cash flow from operating activities in '23 was $561 million, +6.32% year over year.
The revenue of the smart meter business grew steadily. It continued to win bids for smart meters purchased by the State Grid smart meter as the company's main source of revenue. In '23, the business had revenue of 1,436 billion yuan, +17.35% year-on-year, and a gross profit margin of 47.31%, or +6.59 pct year-on-year. The company has been deeply involved in the smart meter business for a long time. It began expanding its own brand electric energy meter business in 2006 and has obtained domestic and foreign product certifications one after another. The advantages of smart meter technology and customer resources are obvious. Since December '23, the company has repeatedly announced that it has won and pre-won the bid for the procurement of measurement equipment from the State Grid and the South Grid, with a total amount of 679 million yuan. The products include A-grade single-phase smart electric energy meters, B-grade three-phase smart energy meters, C-grade three-phase smart energy meters, concentrators and collectors, and special variable acquisition terminals. The increase in demand for power grid tenders is expected to have a positive impact on the company's operating work and operating performance.
The overseas charging pile business has been further expanded, and the high percentage of dividends enhances confidence. Currently, the company is actively expanding the overseas charging pile business. Currently, in Europe, it mainly uses the European subsidiary LOGAREX as a sales platform. The US market cooperates with overseas car companies in the form of OEM, and has obtained AC pile European CE certification and US ETL certification, and the overseas market is expected to contribute to the increase. In addition, the company announced a profit distribution plan for 23 years, with a cash dividend of 5 yuan (tax included) for every 10 shares, and plans to distribute a cash dividend of up to 2.00 yuan (tax included) for every 10 shares in the third quarter of '24, based on the company's closing price of 14.50 yuan on April 18. The sum of the above dividends corresponds to a dividend rate of 4.83%.
A high percentage of dividends boosts confidence and helps long-term healthy development.
Risk warning: Smart meter shipments fall short of expectations; profitability declined due to increased competition in the industry; charging pile shipments fell short of expectations.