Event: The company released its 2023 annual report.

The performance was in line with expectations, and new orders increased dramatically. In 2023, the company achieved operating income of 80.863 billion yuan, a year-on-year decrease of 2.07%; realized net profit of 1,534 billion yuan, a year-on-year decrease of 10.27%; and realized net profit of 1,556 billion yuan after deduction, a decrease of 5.01% year-on-year. By industry, engineering construction is the company's core business, achieving revenue of 74.205 billion yuan, a year-on-year decrease of 3.45%, accounting for 91.76% of total revenue; intelligent equipment manufacturing achieved revenue of 3.290 billion yuan, an increase of 29.03%, accounting for 4.07% of revenue; the power generation sector achieved revenue of 2,038 billion yuan, up 8.15% year-on-year, accounting for 2.52% of revenue; survey, design and consulting services achieved revenue of 845 million yuan, a year-on-year decrease of 0.15%, accounting for 1.05% of revenue; others The business achieved revenue of 485 million yuan, an increase of 14.37% over the previous year, accounting for 0.60% of revenue. In 2023, the total number of new construction projects signed by the company was 89.359 billion yuan, an increase of 210.68% over the previous year. New orders increased dramatically, and the number of orders in hand was full.

The gross margin of the intelligent equipment manufacturing business increased dramatically. The company's gross margin in 2023 was 9.34%, a year-on-year decrease of 0.98pct. By industry, the gross margin of the power generation sector was 55.49%, which is higher than the traditional engineering construction business, with a year-on-year decrease of 3.07pct, of which the gross margin of wind power generation was 62.36%, up 1.38pct; the gross margin of the intelligent equipment manufacturing business was 18.27%, up 9.11pct; and the gross margin of engineering construction was 7.34%, up 0.43pct year on year. In 2023, the company's net profit margin was 1.99%, down 0.45pct year-on-year. By region, Guangdong's gross margin was 9.15%, up 0.59 pct year on year, while gross margin of other regions was 15.93%, up 3.28 pct year on year. The company's net operating cash flow in 2023 was $2,367 million, 15.14% lower than the previous year. The net cash flow from investment activities was -7.565 billion yuan, an outflow of 346.09% over the previous year, mainly due to an increase in investment in clean energy projects under construction in the current period. Net cash flow from financing activities was $6.684 billion, an increase of 74.94% over the previous year, mainly due to an increase in loans obtained and capital raised during the current period.

Focus on clean energy investment, construction and operation, and accelerate the green and low-carbon transformation. The company responds positively to major national and local strategies, grasps policy dividends such as new urbanization, construction of a strong transportation country, and clean energy development, continuously optimizes business layout, and explores market potential. The company follows the principle of “three-year projects aim for two-year work” and efficiently promotes the construction of major projects such as the Guangdong Water Resources Allocation around Beibu Gulf and the East Guangdong Intercity Railway. The company is deeply involved in the regional market, actively participated in the construction of new urbanization in the county area, and successfully established joint ventures with Jiangmen Enping, Meizhou Jiaoling, and Dongguan Humen at the county level. In terms of green transformation, the company is seizing national infrastructure construction and “carbon peak and carbon neutrality” strategic opportunities, leading the way in engineering construction and clean energy investment, construction and operation to help upgrade the industrial structure. By the end of 2023, the company had put into operation a total of 3.9072 million kilowatts of clean energy projects, including 385,500 kilowatts of hydroelectric power, 723,000 kilowatts of wind power, and 2.8037 million kilowatts of photovoltaic power generation.

Investment advice: The company's 2024-2026 revenue is expected to be 87.912 billion yuan, 96.120 billion yuan, and 105.715 billion yuan respectively, up 8.72%, 9.34%, and 9.98% year-on-year respectively. Net profit to mother is 1,730 billion yuan, 1.01 billion yuan, and 2.110 billion yuan, respectively, up 12.79%, 9.87% and 10.99% year-on-year respectively. EPS is 0.46 yuan/share, 0.51 yuan/share, and 0.56 yuan/share. The PE corresponding to the current stock price is 9.07 billion yuan, respectively Times, 8.26 times, and 7.44 times, maintaining the “recommended” rating.

Risk warning: Risk of order fulfillment falling short of expectations; risk of accounts receivable recovery falling short of expectations.