Incidents:
The company published its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 3.175 billion yuan, a year-on-year increase of 15.91%, and achieved net profit of 409 million yuan, an increase of 51.09%; in the first quarter of 2024, the company achieved revenue of 719 million yuan, an increase of 12.48% over the previous year, and achieved a net profit of 98.9572 million yuan, an increase of 22.03% over the previous year.
Revenue has grown steadily, and profitability has improved significantly. The company achieved steady revenue growth in the first quarter of 2023 and 2024. The growth rate of net profit to mother in 2023 was much higher than the revenue growth rate, mainly due to the improvement in the company's gross margin and the elimination of losses in transactional financial assets in 2022. In 2023, the company's gross margin reached 42.31%, up 4.09pct year on year. In the first quarter of 2024, the company's gross margin was 40.93%, up 0.76pct year on year. The company continues to promote cost reduction and efficiency on the product side. The gross margin of the commercial gas meter, which accounts for the highest revenue share, increased from 30.92% in 2022 to 37.77% in 2023.
The deployment of the non-gas sector has been accelerated, and the water meter business is growing at a remarkable rate. The company continues to develop its water business, using the company's accurate measurement and IoT digital technology technology concentric circle, adhering to R&D, strengthening marketing expansion, and reaching cooperative relationships with group customers such as Beijing Water Supply Group, Shanghai Urban Investment Water, Guangzhou Water Supply, China Environmental Water Investment, and China Water Investment. In 2023, the company's water revenue reached 279 million yuan, an increase of 50.42% over the previous year. The company has a forward-looking layout for hydrogen energy measurement and is developing process measuring instruments. The non-gas business is expected to open up a second growth curve for the company.
Emphasis is placed on shareholder returns, and the dividend payment rate is over 50%. The company plans to distribute a cash dividend of 5 yuan (tax included) to all shareholders for every 10 shares, and is expected to distribute a cash dividend of 207 million yuan (tax included), with a dividend payment rate of 50.65%. The company's profitability is steady, the cash flow is good, and it has the ability to pay dividends continuously and stably.
Profit forecast: The company's net profit for 2024-2026 is expected to be 503, 6.03, and 711 million yuan, respectively. The corresponding PE values are 11, 9, and 8 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: the non-gas business is expanding faster than expected; profit forecasting and valuation models are not working