Core views:
COFCO Science and Technology released its 2023 annual report. According to the annual report, in 2023, the company achieved revenue of 2,414 billion yuan, -10.51%; net profit to the mother of 218 million yuan, 29.03%; in 23Q4, the company achieved revenue of 997 million yuan, -7.72%; net profit to mother of 111 million yuan, 52.80% year on year; in 24Q1, the company achieved revenue of 358 million yuan, -16.12% year on year; and net profit to mother of 34 million yuan, 1.8 4% year on year. In addition, the company signed a new contract amount of 3,965 billion yuan in 2023, +0.53% over the same period last year.
Operating cash flow performance was excellent, and gross margin/net margin levels increased. The net operating cash flow in '23 was 433 million yuan, and the net inflow was $132 million in '22. The cash flow was excellent. The company's gross margin/net profit/ROE in '23 was 24.74%/9.29%/11.36%, respectively, up 4.02/2.68/2.05pct year-on-year, respectively, and the gross margin/net interest/ROE level increased significantly.
Order revenue from the mechanical and electrical engineering business remained stable, and the gross margin of the grain and oil processing business increased significantly. Looking at product categories, the new contract amount for the delivery of mechanical and electrical engineering systems was 2.78 billion yuan, achieving revenue of 1,074 billion yuan, up -1.67% year on year, and gross margin increased 2.47 pcts year on year; newly signed design consulting business contract amount was 760 million yuan, -7.02% year on year, achieving revenue of 606 million yuan, +1.28% year on year, gross margin decreased 1.08 pct year on year; newly signed equipment manufacturing business contract amount was 648 million yuan, +1.89% year on year, achieving revenue of 557 million yuan, -19.61% year on year. Gross margin increased 7.76pct year over year. From an industry perspective, the contract amount for the grain and oil processing industry was 3.339 billion yuan, +5.22% year on year, achieving revenue of 2,014 billion yuan, up -7.66% year on year, and gross margin increased by 5.00 pct year on year; new contract amount for the cold chain logistics industry was 5.95 yuan, -20.84% year on year, achieving revenue of 377 million yuan, -23.67% year on year, and gross margin increased 0.78 pct year on year.
Profit forecasting and investment advice. In 2024, the company promoted the mechanical and electrical transformation of design projects, and accelerated the layout of alcohol brewing, agricultural post-delivery and testing and certification. The company's net profit for 24-26 is estimated to be 2.80/3.62 billion yuan, respectively. The company's profit situation is gradually improving. According to the company's own growth rate and order situation, as well as reference to the future market size, the company was given a PE valuation of 25 times in 24 years, with a corresponding reasonable value of 13.67 yuan/share, maintaining a “buy” rating.
Risk warning: macroeconomic downturn; industry competition intensifies; new business development falls short of expectations, etc.