occurrences
On April 23, 2024, the company successively released the 2023 Annual Report and the 2024 Quarterly Report. In 2023, the company's revenue reached 1,946 billion yuan, an increase of 7.4%, net profit to mother of 412 million yuan, an increase of 16.8%, gross margin of 33%, an increase of 3.1 percentage points over 2022, and a net interest rate of 21.2%, an increase of 1.7 percentage points over 2022. The company's revenue for the first quarter of 2024 was 255 million yuan, down 41.56% year on year, and realized net profit of 29 million yuan, down 70.8% year on year. The company's gross margin for the first quarter was 23.91%, down 10.55 percentage points from the same period last year, and the net interest rate was 11.43%, down 11.48 percentage points from the same period last year.
Comment:
The Science and Technology Innovation Industrial Park project was launched, and a production capacity of 280,000 tons will be built. The 19th meeting of the 5th board of directors of the company agreed to invest 2,651 billion yuan to build the High-end Transmission Equipment Science and Technology Innovation Industrial Park (Phase I) project. After completion, it will form a full-process production capacity of 280,000 tons of large-scale high-end forgings.
The gross margin of the wind power industry and the casting and forging industry both increased, and 24Q1 profits were under pressure. In '23, the company's wind power industry had revenue of 1,618 billion yuan, with sales volume of 156,500 tons, an average price of 10338.6 yuan/ton, a year-on-year decrease of 4.9%. Other forging and casting industries had revenue of 276 million yuan, sales volume 262,500 tons, and an average price of 10,514.3 yuan/ton, a year-on-year decrease of 7.89%. The gross margin of the wind power industry in '23 was 33.50%; the year-on-year increase was 3.16 percentage points; the gross margin of the other forging and casting industries was 36.75%, up 4.19 percentage points year-on-year. The company's 24Q1 performance declined a lot. We think it was mainly due to lower shipments and insufficient capacity utilization at the company's Dongying plant.
The trend of large-scale fans in the long term is becoming more and more obvious, and the company is taking the lead in laying out related products. In 2023, the large-scale expansion of onshore wind power fans accelerated, and onshore wind turbines of 10MW and above went offline. Offshore wind power achieved a large-scale breakthrough in 2023, and a domestic 16MW offshore wind unit was put into operation for the first time. In 2023, Jinlei Heavy Equipment, a wholly-owned subsidiary of the company, successfully won the bid for the four major components of the Shanghai Electric V7, Xige SG14, TEPCO's 18MW axle system and 20MW mainframe, and completed the delivery of some products with TEPCO's 18MW axle and 20MW orders, achieving the first time in the industry that large megawatt wind power castings were developed.
The secondary industry is booming, and precision shaft products cover many industries. In 2023, the company will vigorously develop other precision shaft businesses as its secondary industry. Currently, the company's precision shaft products cover industries such as energy and electricity (hydropower, thermal power, hydrogen energy, etc.), cement machinery, mining equipment, shipbuilding, paper machinery, rolling machines, metallurgical machinery, forging machinery, industrial turbine machinery, petrochemicals, industrial motors, industrial water pumps and steel castings. The company's full-process output of industrial products increased steadily throughout the year, and the revenue growth rate of related products reached 68%.
Profit forecast: We expect net profit to be $540 million and $720 million for 24 and 25, respectively. The closing market value as of April 25 was 10.7 or 7.9 times PE in 24-25.
Risk factors: risk of offshore wind power development falling short of expectations, risk of fluctuating raw material prices, risk of increased industry competition.