Incident: The company released its 2024 quarterly report, with a high growth rate after deducting non-net profit.
1) 2024Q1 achieved revenue of 1,305 million yuan, +0.60% year over month, and -31.13% month on month; realized net profit of 95 million yuan, +8.57% year on year, -44.79% month on month; realized deducted non-net profit of 101 million yuan, +36.63% year on month, and -36.12% month on month;
2) 2024Q1 gross profit margin of 25.39%, +2.70pct (mainly due to an increase in overseas revenue share), +0.94pct month-on-month; net profit margin 7.15%, +0.44pct year-on-month, -1.80pct; 3) Net operating cash flow - 331 million yuan, mainly due to: a) payment of more accounts payable and notes payable due in the current period; b) increased capital investment in the new energy business in the current period.
The three major businesses are developing steadily, and the share of overseas revenue has increased.
1) Business segment: 2024Q1 transmission, distribution and control equipment manufacturing achieved revenue of 1,133 billion yuan (87%), revenue from energy storage products of 110 million yuan (8%), and overall digital solutions of 57 million yuan (4%);
2) By region: 2024Q1's domestic revenue was 912 million yuan (70%), overseas revenue was 388 million yuan (30%), and the share of overseas revenue increased further (18% for the full year of 2023); the increase in the share of overseas revenue contributed to an increase in gross margin.
Recently, large overseas orders have been signed, and the order growth rate is expected to maintain a relatively rapid level.
Recently, the company signed several contracts with overseas customer E, one of the main EPC partners, to supply various types of transformers. Based on the exchange rate of 1 US dollar to RMB 7.1025 announced by the Foreign Exchange Center of the People's Bank of China on April 17, 2024, the cumulative contract amount is equivalent to about RMB 739 million. In the current tight supply and demand situation of overseas substation equipment (export data: transformer exports in March 2024 were US$484 million, +22.10% YoY; cumulative transformer exports in January-March 2024 were US$1,313 billion, +25.90% YoY), the company's overseas orders are expected to maintain rapid growth.
Investment suggestions: We expect the company's revenue in 2024-2026 to be 8.983 billion yuan, 11.371 billion yuan, and 13.631 billion yuan, respectively, +34.73%, +26.58%, and +19.87%; net profit to mother will be 754 million yuan, 1,028 million yuan, and 1,278 billion yuan, respectively, +49.40%, +36.40%, and +24.30%; EPS is 1.73/2.37/2.94 yuan, respectively. The current stock price corresponds to PE 28/20/16 times, maintaining “buying” ” Ratings.
Risk warning: the development of the new energy industry falls short of expectations, overseas market development falls short of expectations, the industry competition pattern deteriorates, etc.