Incident Overview
The company publishes its 2023 annual report and 2024 quarterly report.
Revenue side: 24Q1 revenue is under pressure in the short term, waiting for mooring chain orders to achieve revenue of 1.931 billion yuan in 2023, +27% year over year, of which Q4 was 441 million yuan, or -1% year over year. By business: 1) Marine chains and accessories: achieved revenue of 1,352 million yuan in 2023, +23% year over year; achieved sales of 132,700 tons, +24% year over year; 2) Mooring chain: achieved revenue of 559 million yuan in 2023, +41% year over year; achieved sales of 32,100 tons, or +19% year over year. In 2023, the company received orders of 180,600 tons, +13% year-on-year, of which 151,600 tons of ship anchor chains and accessories were ordered, +28% year-on-year, continuing rapid growth. Mooring chain orders were 29,000 tons, or -31% year-on-year, down in the short term.
2024Q1 achieved revenue of 449 million yuan, -8% year-on-year. We judge that it is mainly due to the high revenue base of 2023Q1. Looking ahead to 2024, the shipping industry is in strong demand. The company's ship anchor chain orders are expected to continue to grow steadily. At the same time, the offshore oil and gas industry continues to be booming, and the company's mooring chain orders are expected to accelerate, which will support the company's revenue side to continue to grow rapidly.
Profit side: The gross margin increased markedly, and the profit level is on a rapid upward channel. In 2023, the company's net profit to mother and net profit after deducting non-return to mother were 2.37 million yuan and 202 million yuan respectively, +59% and +50%, respectively. In 2023, the company's net sales interest rate and net profit margin after deducting non-sales were 12.14% and 10.45%, respectively, compared with +2.02 and +1.57pct, respectively. The profit level increased markedly. 1) Margin side: The gross margin of sales in 2023 was 30.59%, +4.58pct. Among them, the gross margin of marine chains, accessories, and mooring chains was 25.52% and 41.59%, respectively, +3.19 and +7.46pct, respectively. We determined that on the one hand, it was due to product structure optimization and a decrease in raw material prices, and on the other hand, it benefited from the depreciation of the RMB exchange rate against the US dollar (42% of the company's overseas revenue in 2023). 2) Expense side: The company's expense ratio for the 2023 period was 16.60%, +3.75pct year on year. Among them, sales, management, R&D and financial expenses rates were +0.72, +0.09, +0.43, and +2.50pct, respectively. The financial expense ratio increased markedly, mainly due to a decrease in exchange earnings. 3) The company's net investment income in 2023 was 22.82 million yuan, +648% year-on-year, further increasing profit margins.
2024Q1's net profit to mother and net profit after deduction were $6,798 million and 44.08 million, respectively; net sales interest rate and net profit margin after net sales were 15.33% and 9.81%, respectively, +3.08 and +0.52 pct year on year, respectively; gross sales margin and period expense ratio were 27.45% and 15.07%, respectively, +1.10 and +0.70pct, respectively, and the profit level further increased.
The “three arrows go hand in hand” for anchor chains, mooring chains, and mining chains. Floating offshore wind power opens up room for growth as a global chain leader. The company is fully benefiting from the high boom in the shipping and offshore industry. At the same time, the mining chain is expected to enter the 1-N acceleration phase, and the basic market is in an upward channel. 1) Ship anchor chain: In January of 2023 and 2024, China's shipbuilding received new orders of 7120 and 15.2 million DWT, respectively. The shipping industry sentiment remains high, and the company's ship anchor chain is expected to fully benefit; 2) Offshore Mooring Chain: The company's mooring chain will fully benefit from the upward trend in the offshore industry and deep-sea oil and gas development; 3) Mining chain: Domestic substitution is the main growth logic, and the company is expected to enter the rapid release phase. Furthermore, under the deep-sea trend, floating offshore wind power is a medium- to long-term development trend. At the end of 2022, China Power Construction's Hainan Wanning 1 million kilowatt floating offshore wind power project officially started. It is planned to install a total capacity of 1 GW. At the end of 2023 and April 2024, the first phase of the 100MW host and floating body tenders will be completed, respectively. Industrialization is progressing rapidly. The company has a strong first-mover advantage in the field of mooring chains and is expected to fully benefit from the 0 to 1 development of floating offshore wind power.
Investment advice
Taking into account the company's order signing pace, we adjusted the profit forecast for 2024-2025, with estimated revenue of 24.14 billion yuan and 2,969 billion yuan (original value of 26.23 billion yuan and 3.198 billion yuan), respectively, and expected revenue of 2026 to 3.6 billion yuan, +23%, respectively; net profit to mother for 2024-2025 is estimated to be 297 million yuan and 377 million yuan (original value of 334 million yuan and 437 million yuan), respectively, and is expected to be +26% and +27%, respectively. Net profit due to mother in 2026 was 481 million yuan, +28% year-on-year; EPS is expected to be 0.31 yuan and 0.39 yuan (original value 0.35 and 0.46 yuan) in 2024-2025, respectively, and EPS is expected to be 0.50 yuan in 2026. The closing price of 7.90 yuan on April 23, 2024 was 25, 20, and 16 times PE, respectively. In view of the company's outstanding growth, the “gain” rating was maintained.
Risk warning
The shipbuilding and offshore industry is declining, competition is intensifying, and the industrialization of floating offshore wind power falls short of expectations, etc.