The 24Q1 revenue/net profit ratio was -14.9%/-2.8%, and the 24Q1 “purchase” rating company achieved revenue/net profit/deducted non-return to mother of 95.7/2.44/235 million yuan, compared with -14.9%/-2.8%/-3.9% (restated). Net profit to mother basically met our expectations (240 million yuan), and profit growth performance was better than revenue growth, mainly due to year-on-year improvement in profitability and reduced tax rates. We maintain the 24-26 net profit forecast for the year 24-26 at 2,40/25.3/2.65 billion yuan. Comparatively, Wind agreed to expect an average PE value of 5x in 24, approved 5x PE for 24 years, maintained a target price of 7.69 yuan, and maintained a “buy” rating.
The 24Q1 comprehensive gross margin improved year on year, and the cost ratio increased more due to the decline in revenue. The 24Q1 company's comprehensive gross margin was 12.1%, up 1.6 pct year on year. The cost ratio for the 24Q1 period was 8.0%, +1.5pct year over year, with sales/management/ R&D/finance expenses rates of 0.02%/3.8%/2.0%/2.2%, respectively, -0.01/+0.13/+0.75/+0.64pct, and management expenses -11.9% year-on-year. Affected by the decline in revenue, the cost rate still increased; R&D efforts increased, and expenses were +36.3%; financial expenses were +20.7% year-on-year, mainly due to short-term borrowing/long-term borrowing/bond payables, respectively. 8.6/19.3/1.04 billion. The company's 24Q1 net profit margin was 2.56%, +0.32pct year-on-year.
The balance and liability structure was optimized, and the mismatch of income and expenditure due to seasonal factors affected short-term cash flow 24Q1. The company's interest-bearing debt accounted for 48.0% of the total invested capital, -4.1pct compared to the beginning of the year; the balance ratio was 76.0%, -2.0pct year-on-year, and -0.57pct compared to the beginning of the year. The 24Q1 net operating cash outflow of the company was 2.76 billion yuan, an increase of 740 million yuan over the previous year, mainly due to a mismatch between the company's sales repayment and purchase payment schedule. The payment/payout ratio was 135.4%/151.9%, respectively, +29.1/+29.3 pct.
New orders grew rapidly in '23. In '23, the province's transportation investment was steady, with 23 billion mid-year bid orders, +35.5%, of which the province accounted for 73%, an increase of 19.1 pct over the same period last year. According to the Shandong Provincial Transportation Department, the province invested 2655/ 308.4 billion yuan in 21-22, and completed an investment of 314.7 billion yuan in January-November '23, with a 24-year target of 325 billion yuan. Steady investment in the province provides a good market for the company, and at the same time actively expands overseas business with the company, which is expected to achieve steady growth. By the end of '23, the company had $136 billion in orders, about 1.86 times its revenue for '23.
Risk warning: the risk that steady growth falls short of expectations and subsequent order conversion falls short of expectations.