Financial highlights: The company disclosed its 2023 annual report, achieving annual revenue of 4.2 billion yuan, a year-on-year increase of 26.91%, and net profit to mother of 980 million yuan, an increase of 47.90% over the previous year.
Overseas business grew rapidly, helping to exceed expectations for the full year. The company's revenue grew rapidly, mainly due to the continuous development of the overseas intelligent electricity distribution business, which made up for the slight decline in the domestic market. Among them, the overseas smart electricity business achieved revenue of 2,561 billion yuan, an increase of 41.72%, while domestic smart electricity achieved revenue of 1,034 billion yuan, a decrease of 5.47%; overseas smart distribution achieved revenue of 117 million yuan, an increase of 406.67%, while domestic smart distribution achieved revenue of 289 million yuan, a decrease of 4.84%. Net profit grew faster than revenue, mainly due to the combined contribution of factors such as falling raw material prices, depreciation of RMB, and increased share of solutions.
Actively promote new products and new market development, and make concerted efforts in domestic and overseas business. Looking ahead to China this year, the company won the total bid amount of 689 million yuan for the second batch in '23 and the first batch of State Grid in '24, an increase of 18.6% over the previous year. It also won the bid for the first time in '23, which is beneficial to supporting the growth of domestic business revenue throughout this year. Overseas business. On the one hand, the company actively launched a series of new energy distribution network products such as DC combiner boxes, low voltage grid-connected cabinets, high-voltage grid-connected cabinets, and photovoltaic booster box transformers. On the other hand, it continued to promote the supply chain globalization strategy, launched factory layout plans in Europe and Latin America, and accelerated the development of new overseas markets. With the launch and acceleration of the digital transformation of power grids at home and abroad, domestic and overseas markets will make concerted efforts to help the company's performance grow.
The overall solution provides + localization strategies to build a competitive advantage for the brand. Haixing has accumulated rich experience in global management in the past. By implementing localization strategies overseas, hiring local employees, and circumventing trade protection and trade barriers, Haixing has formed a localized channel advantage. At the same time, the company carried out technological innovation and iterative research and development in intelligent measurement products, intelligent Internet of Things (AIoT) platforms, communication technology, and system software, etc., to provide customers with overall solutions from software, communications, terminals to engineering services. System software and solutions accounted for about 60% of the company's total revenue from overseas intelligent electricity business in '23. Through product and service capabilities, the company has established deep customer relationships with overseas customers and built the competitive advantage of the company's brand.
Company profit forecast and investment rating: We expect the company's net profit for 2024-2026 to be $1,244, $15.41, and $1,859 billion, respectively, with corresponding EPS of 2.55, 3.15 and 3.80 yuan respectively. The current stock price corresponds to 2024-2026 PE values 20, 16, and 13 times, respectively. Maintain a “Highly Recommended” rating.
Risk warning: Overseas market expansion falls short of expectations; raw material prices fluctuate; downstream demand fluctuates.