Revenue in 23 years was +44.3% YoY, and incentive expenses affected profit growth in the short term. Maintaining “purchase” rated companies achieved net profit of 12.77/174 million, +44.3%/+11.0% year over year, and net profit to mother was lower than our expectations (223 million). Mainly due to the company's implementation of restricted stock incentive plans and employee shareholding plans in 23, share payment fees, and management costs increased a lot. Among them, 23Q4/24Q1 achieved revenue of 3.76/288 million, +28.8%/42.4% YoY, net Profit of 0.30/0.30 billion, +59.3%/+5.5% YoY. Considering the year-on-year decline in new orders signed by the company in '23, we adjusted the net profit for 24-26 to be 2.25/2.92/366 million (the previous value was 3.22/425 million). Considering the rising boom in international emerging markets, it is expected to bring new growth momentum to the company. Using the PEG valuation method, we can compare the company's 24-year Wind with a consistent expected average of 0.9x, giving the company 0.9xPEG in 24, and adjusting the target price to 23.21 yuan (previous value of 32.26 yuan), maintaining the “buy” rating.

Overseas revenue increased significantly in '23, with revenue from Southeast Asia and the Middle East accounting for about 59.5%/14.0%. Looking at the sub-business, foundation treatment/pile foundation project revenue in '23 was 99/2.8 million, +30.9%/+149.3%, gross profit margin 38.3%/19.5%, -1.7/+6.7pct year on year. Pile foundation project revenue and gross margin both increased significantly. Affected by this, the company's comprehensive gross profit margin in 23 was 34.3%, -2.1 pct year on year, 37.3% year on year, +4.8 pct year on year 24Q1. By region, domestic/overseas revenue for 23 years was 33/950 million, -5.9%/+81.1% YoY, gross profit margin 47.1%/29.6%, -9.2/+6.5pct YoY. The company is deeply cultivating and consolidating its advantages in the Southeast Asian market and actively expanding the booming Middle East region. Overseas revenue accounted for +15.1pct to 74.4% year on year in '23, of which Southeast Asia and the Middle East accounted for 59.5%/14.0%. The Indonesian and Dubai subsidiaries each contributed $53/110 million in revenue, accounting for 41.5%/8.6%; net profit of 0.95/0.35 billion, accounting for 55%/20%.

The increase in exchange losses and impairment expenses dragged down the net interest rate of return to mother in '23. Operating cash flow improved 15.7% year on year, +1.0pct year on year. Among them, the sales/management/R&D/finance ratio was -0.19/-0.15/+1.56pct year on year, and financial expenses increased by 13 million yuan year over year, mainly due to exchange losses of 3.46 million yuan in '23, and exchange earnings of 1.02 million yuan in '22. Impairment expenses were +231.6% year-on-year, accounting for +1.11pct to 1.96% of revenue. Under the combined influence, net interest rate to mother in '23 was -4.1pct to 13.6% yoy. Expense rate/ net profit margin for the 24Q1 period was 21.3%/10.5%, respectively, +2.7/-3.7pct. The company's net operating cash in '23 was 134 million yuan, with a year-on-year increase of 320,000 yuan. The payment/payout ratio was 92.3%/93.4%, respectively, -2.4/+4.9pct year-on-year.

Overseas orders accounted for 80% of new orders in '23, which is fully in line with the “Belt and Road” boom market companies signed 1.06 billion yuan of new orders in '23, of which 850 million yuan was overseas orders, accounting for 80%. The company responds positively to national plans such as the “Belt and Road” initiative, “2045 Golden Indonesia” and Saudi Arabia's “Vision 2030”, focusing on Southeast Asia, the Middle East and other regions. Orders are spread all over Thailand, Indonesia, Singapore, Vietnam, Dubai, Saudi Arabia, Bangladesh, etc., and is expected to fully benefit from the “Belt and Road” development opportunities.

Risk warning: Overseas investment falls short of expectations, new orders fall short of expectations, profit margins fall short of expectations.